Filed pursuant to
the General Instruction II.K. of Form F-9;
File No. 333-103296
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED NOVEMBER 29, 2001
AS AMENDED BY A PROSPECTUS AMENDMENT DATED JUNE 7, 2002 AND BY A PROSPECTUS
AMENDMENT DATED FEBRUARY 17, 2003
US$450,000,000
[BRASCAN CORPORATION LOGO]
US$200,000,000 5.750% Notes Due March 1, 2010
US$250,000,000 7.375% Debentures Due March 1, 2033
------------------
We will pay interest on the notes and debentures each March 1 and September
1. We will make the first interest payment on September 1, 2003. Unless we
redeem the notes or debentures earlier, the notes will mature on March 1, 2010
and the debentures will mature on March 1, 2033. We may redeem some or all of
the notes and debentures at any time at 100% of the principal amount plus a
make-whole premium. We may also redeem all of the notes and debentures at any
time in the event that certain changes affecting Canadian income taxation occur.
There is currently no market through which the notes or debentures may be
sold and purchasers may not be able to resell the notes or debentures purchased
under this prospectus supplement.
UNDERWRITING
PRICE TO DISCOUNTS AND NET PROCEEDS
PUBLIC(1) COMMISSIONS TO BRASCAN(2)
-------------- -------------- --------------
Per Note............................................. 99.575% 0.625% 98.950%
Total................................................ US$199,150,000 US$1,250,000 US$197,900,000
Per Debenture........................................ 97.969% 0.875% 97.094%
Total................................................ US$244,922,500 US$2,187,500 US$242,735,000
(1) Plus accrued interest, if any, from March 4, 2003.
(2) Before deducting expenses of the offering, estimated at US$243,000.
The underwriters, as principals, conditionally offer the notes and
debentures, subject to prior sale, if, as and when issued by Brascan Corporation
and accepted by the underwriters in accordance with the conditions contained in
the underwriting agreement referred to under "Underwriting".
Delivery of the notes and debentures, in book-entry form only, will be made
on or about March 4, 2003.
WE ARE PERMITTED TO PREPARE THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IN ACCORDANCE WITH CANADIAN DISCLOSURE REQUIREMENTS, WHICH ARE
DIFFERENT FROM THOSE OF THE UNITED STATES. WE PREPARE OUR FINANCIAL STATEMENTS
IN ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, AND THEY
MAY BE SUBJECT TO CANADIAN AUDITING AND AUDITOR INDEPENDENCE STANDARDS. THEY MAY
NOT BE COMPARABLE TO FINANCIAL STATEMENTS OF UNITED STATES COMPANIES.
OWNING THE NOTES OR DEBENTURES MAY SUBJECT YOU TO TAX CONSEQUENCES BOTH IN
THE UNITED STATES AND CANADA. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS MAY NOT DESCRIBE THESE TAX CONSEQUENCES FULLY. YOU SHOULD READ THE
TAX DISCUSSION BEGINNING ON PAGE S-16.
YOUR ABILITY TO ENFORCE CIVIL LIABILITIES UNDER THE UNITED STATES FEDERAL
SECURITIES LAWS MAY BE AFFECTED ADVERSELY BECAUSE WE ARE AMALGAMATED IN ONTARIO,
CANADA, SOME OF OUR OFFICERS AND DIRECTORS AND SOME OF THE EXPERTS NAMED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ARE CANADIAN RESIDENTS,
AND MANY OF OUR ASSETS ARE LOCATED OUTSIDE THE UNITED STATES.
UNDER CANADIAN SECURITIES LEGISLATION, WE ARE CONSIDERED TO BE A RELATED
ISSUER OF TRILON INTERNATIONAL INC., ONE OF THE UNDERWRITERS, AS WE OWN MORE
THAN 20% OF THE VOTING SECURITIES OF TRILON INTERNATIONAL INC. SEE
"UNDERWRITING."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Sole Book-Running Manager Joint Lead Manager
CREDIT SUISSE FIRST BOSTON SALOMON SMITH BARNEY
BANC ONE CAPITAL MARKETS, INC.
BNP PARIBAS
HSBC
UTENDAHL CAPITAL PARTNERS, L.P.
TRILON INTERNATIONAL INC.
The date of this prospectus supplement is February 27, 2003
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
DOCUMENTS INCORPORATED BY
REFERENCE......................... S-1
SPECIAL NOTE REGARDING
FORWARD-LOOKING INFORMATION....... S-1
PRESENTATION OF FINANCIAL
INFORMATION....................... S-2
EXCHANGE RATE DATA.................. S-2
SUMMARY OF THE OFFERING............. S-3
THE COMPANY......................... S-5
RECENT DEVELOPMENTS................. S-5
USE OF PROCEEDS..................... S-6
PAGE
----
DESCRIPTION OF THE NOTES AND
DEBENTURES........................ S-7
CERTAIN CANADIAN FEDERAL INCOME TAX
CONSIDERATIONS.................... S-16
CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSIDERATIONS................ S-16
UNDERWRITING........................ S-18
RISK FACTORS........................ S-19
CREDIT RATINGS...................... S-20
EARNINGS COVERAGE RATIOS............ S-21
LEGAL MATTERS....................... S-21
AMENDMENT NO. 2 TO THE SHORT FORM BASE SHELF PROSPECTUS
AMENDMENT NO. 1 TO THE SHORT FORM BASE SHELF PROSPECTUS
SHORT FORM BASE SHELF PROSPECTUS
PAGE
----
DOCUMENTS INCORPORATED BY
REFERENCE......................... 2
AVAILABLE INFORMATION............... 4
SPECIAL NOTE REGARDING FORWARD-
LOOKING INFORMATION............... 4
THE COMPANY......................... 4
USE OF PROCEEDS..................... 5
EARNINGS COVERAGE RATIOS............ 5
PAGE
----
DESCRIPTION OF DEBT SECURITIES...... 6
PLAN OF DISTRIBUTION................ 15
LEGAL MATTERS....................... 15
EXPERTS............................. 16
DOCUMENTS FILED AS PART OF THE
REGISTRATION STATEMENT............ 16
------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
The notes and debentures have not been and will not be qualified for sale
under the securities laws of Canada or any province or territory of Canada. The
notes and debentures are not being offered for sale and may not be offered or
sold, directly or indirectly, in Canada, or to any resident thereof, in
violation of the securities laws of Canada or any province or territory of
Canada.
As used in this prospectus supplement, unless the context otherwise
indicates, references to the "Company" refer to Brascan Corporation and
references to "Brascan" refer to the Company and its direct and indirect
subsidiaries.
DOCUMENTS INCORPORATED BY REFERENCE
This prospectus supplement is deemed to be incorporated by reference into
the accompanying short form base shelf prospectus of the Company dated November
29, 2001 as amended by a prospectus amendment dated June 7, 2002 and a
prospectus amendment dated February 17, 2003 (collectively, the "Prospectus")
solely for the purpose of the notes and debentures issued hereunder.
The following documents, filed with the securities regulatory authorities
in each of the provinces of Canada, are specifically incorporated by reference
in, and form an integral part of, this prospectus supplement and the Prospectus:
(a) the Company's annual information form dated May 21, 2002;
(b) the unaudited comparative consolidated financial statements of the
Company contained in the interim report to shareholders for the nine
months ended September 30, 2002;
(c) management's discussion and analysis of financial condition and
results of operations dated November 6, 2002 contained in the interim
report to shareholders for the nine months ended September 30, 2002;
(d) the audited comparative consolidated financial statements of the
Company and the notes thereto for the financial year ended December
31, 2001, together with the report of the auditors thereon, found at
pages 45 through 67 of Brascan's 2001 annual report;
(e) the financial analysis and review section contained in pages 17 to 44
of the Company's 2001 annual report;
(f) the Company's management information circular dated February 28, 2002
in connection with the 2002 Annual Meeting of Shareholders, other than
the sections entitled "Executive Compensation" and "Performance
Graph"; and
(g) the press release of the Company dated February 14, 2003.
ANY STATEMENT CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR IN A DOCUMENT
INCORPORATED OR DEEMED TO BE INCORPORATED BY REFERENCE HEREIN SHALL BE DEEMED TO
BE MODIFIED OR SUPERSEDED FOR THE PURPOSES OF THIS PROSPECTUS SUPPLEMENT TO THE
EXTENT THAT A STATEMENT CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR IN ANY OTHER
SUBSEQUENTLY FILED DOCUMENT WHICH ALSO IS OR IS DEEMED TO BE INCORPORATED BY
REFERENCE HEREIN MODIFIES OR SUPERSEDES THAT STATEMENT. ANY STATEMENT SO
MODIFIED OR SUPERSEDED SHALL NOT CONSTITUTE A PART OF THIS PROSPECTUS
SUPPLEMENT, EXCEPT AS SO MODIFIED OR SUPERSEDED.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements included and incorporated by reference herein constitute
"forward-looking statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements include, but are
not limited to, references to future capital expenditures (including the amount
and nature thereof), business strategies and measures to implement strategies,
competitive strengths, goals, expansion and growth of Brascan's business and
operations, and plans and references to the future success of Brascan. These
forward-looking statements are based on certain assumptions and analyses made by
the Company in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
and developments will conform with the expectations and predictions of the
Company is subject to a number of risks and uncertainties, including, but not
limited to: general economic, market or business conditions; fluctuations in the
value of the Canadian dollar relative to other currencies; fluctuations in
interest rates; the opportunities (or lack thereof) that may be presented to and
pursued by Brascan; competitive actions by other companies; conditions in the
property, energy, financial and natural resources industries; the cyclical
nature of the resource operations and fluctuations in commodity prices; changes
in laws or regulations, including changes in the regulations, standards and
market expectation regarding the environment, particularly in natural
S-1
resources and energy operations; risks associated with the economic, political
and regulatory policies of local governments and laws and policies of Canada,
the United States and Brazil; the potential impact of increased competition in
the markets within which Brascan operates; and other factors, many of which are
beyond the control of Brascan. Consequently, all of the forward-looking
statements made in this prospectus supplement and the documents incorporated by
reference herein are qualified by these cautionary statements, and there can be
no assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequences to, or effects on, the Company. As a result of these
factors, the Company's revenue and income could vary significantly from quarter
to quarter, and past financial performance should not be considered a reliable
indicator of future performance. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary statements set forth or
referred to above in this paragraph. Investors are cautioned not to place undue
reliance on such statements which speak only as of the date hereof. The Company
undertakes no obligation to release publicly any revision to these
forward-looking statements to reflect events or circumstances following the date
hereof or to reflect the occurrence of unanticipated events, except as may be
required by securities laws.
PRESENTATION OF FINANCIAL INFORMATION
THE COMPANY PUBLISHES ITS CONSOLIDATED FINANCIAL STATEMENTS IN CANADIAN
DOLLARS. IN THIS PROSPECTUS SUPPLEMENT, UNLESS OTHERWISE SPECIFIED OR THE
CONTEXT OTHERWISE REQUIRES, ALL DOLLAR AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS
AND REFERENCES TO "CDN$" OR "$" ARE TO CANADIAN DOLLARS AND REFERENCES TO "US$"
ARE TO UNITED STATES DOLLARS.
The Company presents its financial statements in accordance with accounting
principles generally accepted in Canada ("Canadian GAAP"). For a discussion of
certain significant differences between Canadian GAAP and accounting principles
generally accepted in the United States as they relate to the Company, see note
22 to the audited consolidated financial statements of the Company.
EXCHANGE RATE DATA
The following table sets forth, for each period indicated, the high and low
exchange rates, the average of such exchange rates on the last business day of
each month during such period and the exchange rate at the end of such periods
based on the noon buying rate in The City of New York for cable transfers in
Canadian dollars as certified for customs purposes by the Federal Reserve Bank
of New York (the "Noon Buying Rate"). Such rates are set forth as U.S. dollars
per Cdn$1.00 and are the inverse of rates quoted by the Federal Reserve Bank of
New York for Canadian dollars per US$1.00. On February 27, 2003 the inverse of
the Noon Buying Rate was US$.6687 per Cdn $1.00.
YEAR ENDED DECEMBER 31,
-------------------------------------
2002 2001 2000 1999 1998
----- ----- ----- ----- -----
High.................................................... .6619 .6697 .6969 .6925 .7105
Low..................................................... .6200 .6241 .6410 .6535 .6341
Average................................................. .6368 .6457 .6725 .6744 .6714
Period End.............................................. .6329 .6279 .6669 .6925 .6504
S-2
SUMMARY OF THE OFFERING
The following is a brief summary of the terms of this offering. For a more
complete description of the terms of the notes, see "Description of the Notes"
in this prospectus supplement and "Description of Debt Securities" in the
Prospectus.
ISSUER..................... Brascan Corporation.
SECURITIES OFFERED......... US$200,000,000 principal amount of 5.750% notes due
March 1, 2010.
US$250,000,000 principal amount of 7.375%
debentures due March 1, 2033.
MATURITY DATE.............. Notes: March 1, 2010.
Debentures: March 1, 2033.
INTEREST RATE.............. Notes: 5.750% per annum.
Debentures: 7.375% per annum.
INTEREST PAYMENT DATES..... March 1 and September 1 each year, beginning on
September 1, 2003.
RANK....................... The notes and debentures will rank equally with
other unsecured debt.
REDEMPTION................. The notes and debentures are redeemable, at any
time at the Company's option, at a redemption price
equal to the principal amount thereof plus accrued
and unpaid interest and a make-whole premium, as
more fully described under "Description of the
Notes and Debentures -- Optional Redemption". The
notes and debentures are also redeemable in the
event of certain changes affecting Canadian
withholding tax, as more fully described under
"Description of the Notes and Debentures --
Redemption for Changes in Canadian Withholding
Taxes".
USE OF PROCEEDS............ The net proceeds from this offering will be used
for general corporate purposes, including the
repayment of corporate debt.
FORM AND DENOMINATIONS..... Each of the notes and the debentures will be
represented by one or more fully-registered global
securities registered in the name of a nominee of
The Depository Trust Company. Beneficial interests
in those fully-registered global securities will be
in denominations of US$1,000 and integral multiples
thereof. Except as described under "Description of
the Notes and Debentures" in this prospectus
supplement and "Description of Debt Securities" in
the Prospectus, notes and debentures in definitive
form will not be issued.
CERTAIN COVENANTS.......... The Indenture governing the notes and debentures
contains covenants that, among other things,
restrict the Company's ability to:
- create certain liens;
- make asset dispositions and use proceeds from
permitted asset dispositions;
- declare or pay dividends or acquire capital stock
or debt of the Company;
- incur payment restrictions that other parties
impose; and
S-3
- consolidate, merge with a third party or transfer
all or substantially all of its assets.
These covenants are subject to important exceptions
and qualifications which are described under
"Description of Debt Securities" in the Prospectus.
S-4
THE COMPANY
Brascan Corporation is a North American based company which owns and
manages assets which generate sustainable cash flows. Current operations are
largely in the real estate, power generation and financial sectors. Total assets
exceed $23 billion and include 55 premier commercial properties and 38 power
generating facilities. In addition, the Company holds investments in the
resource sector. Brascan's registered office is Suite 4400, BCE Place, 181 Bay
Street, Toronto, Ontario, M5J 2T3, Canada.
RECENT DEVELOPMENTS
The following is a summary of significant recent developments affecting
Brascan since January 1, 2002.
In February 2003, the Company issued $175 million of Class A Preference
Shares, Series 12. The net proceeds of the distribution were used for general
corporate purposes.
In January 2003, the Company announced that it had agreed to subscribe for
$300 million in preferred shares of Noranda Inc. ("Noranda") with a dividend
rate of 8% which may be issued prior to February 28, 2003 or a later date to
which Noranda and the Company may agree. The preferred shares, if issued, will
be redeemable at their par value from any proceeds received by Noranda from a
subsequent public issue of common or preferred shares, or alternatively in cash
or Noranda common shares based on their market price, at the end of five years.
In January 2003, Noranda announced that it plans to rationalize its
magnesium business to respond to major structural changes which have taken place
in the magnesium industry. The rationalization is expected to improve the 2003
operating results and cash flow by approximately $100 million. An after-tax
non-cash charge of $630 million will be reflected in Noranda's 2002 year-end
financial results. The Company's share of the writedown of Noranda's magnesium
business represents a non-cash charge of approximately $255 million or $1.44 per
share.
In January 2003, Brascan completed the spin-off of Brookfield Homes
Corporation, a Delaware corporation which was until that time, a wholly-owned
subsidiary of Brookfield Properties Corporation ("Brookfield"), through a
distribution of its common shares on the New York Stock Exchange. The Company is
now the majority shareholder of the outstanding common shares of Brookfield
Homes Corporation. Brookfield Homes Corporation is a residential homebuilder and
land developer which builds homes and develops land in master-planned
communities and in fill locations in the U.S.
In January 2003, Brascan announced the filing of a preliminary prospectus
for the Royal LePage Residential Royalties Fund, a limited purpose trust that
will receive royalties from the Royal LePage franchise network which provides
residential property brokerage services.
In December 2002, Brascan announced that Royal LePage Relocation Services
had been awarded a five-year contract by the Government of Canada to provide
relocation assistance to public servants, members of the Canadian Forces and the
Royal Canadian Mounted Police. The estimated fee revenue from this contract
ranges from $25 million to $30 million annually.
In November 2002, Brascan acquired the remaining 50% interest in the Lake
Superior Power Generating Facility in northern Ontario for $65 million,
comprised of approximately $30 million in cash and the assumption of $35 million
of debt.
In October 2002, Brascan announced that it had entered into a 10 year
renewal lease for nearly 210,000 square feet and a new lease with another tenant
for a total of more than 250,000 square feet at One Liberty Plaza in lower
Manhattan.
In September 2002, Brookfield issued $200 million of Class AAA, Series F
preference shares. The net proceeds of the distribution were used to redeem $200
million of Class AAA preference shares, Series A, B and C held by the Company.
S-5
In September 2002, Brascan acquired a 51% interest in Three World Financial
Center in lower Manhattan for US$158 million. The remaining 49% interest is
owned by American Express.
In August 2002, the Company acquired all the outstanding Class A and Class
B Non-Voting Shares of its subsidiary, Brascan Financial Corporation (formerly
Trilon Financial Corporation)("Brascan Financial"), that it did not already own.
The Company acquired 45.6 million Class A Shares of Brascan Financial, for
consideration of $359 million in cash, 11.4 million Class A Limited Voting
Shares of the Company and 1.1 million Class A Preference Shares, Series 11 of
the Company.
In August 2002, Brascan sold a 50% interest in the 2.7 million square foot
Bankers Hall Complex in Calgary, Alberta for $300 million.
In July 2002, the Company issued $73.5 million of Class A, Series 11
preference shares. The net proceeds of the distribution were used for general
corporate purposes.
In June 2002, the Company issued US$350 million of 7.125% notes due June
15, 2012. The net proceeds of the distribution were used for general corporate
purposes, including increasing its interest in its principal business units and
the repayment of corporate debt.
In May 2002, Brascan acquired four hydroelectric generating stations in
northern Ontario with a combined generating capacity of 448 megawatts ("MW")
from Ontario Power Generation Inc. for $340 million. This acquisition increased
Brascan's total power generating capacity to over 1,600 MW.
In April 2002, the Company received approval for a normal course issuer bid
to purchase up to 13,900,000 Class A Limited Voting Shares of the Company,
representing approximately 10% of the public float of the issued and outstanding
Class A Limited Voting Shares of the Company, through open market purchases on
the New York and Toronto Stock Exchanges during the period from April 2002 to
April 2003.
In April 2002, the Company issued $125 million of 8.30% unsecured junior
subordinated debentures due June 30, 2051. The net proceeds of the distribution
were used for general corporate purposes, including increasing its interest in
its principal business units and the repayment of corporate debt.
In March 2002, Brascan sold a 50% interest in Exchange Tower, a 1.1 million
square foot office property in downtown Toronto, Ontario, for $155 million.
In February 2002, Brascan acquired six hydroelectric generating stations in
northern Maine with a combined generating capacity of 126 MW and related
transmission facilities for US$156 million.
USE OF PROCEEDS
The net proceeds from this offering, after deducting the underwriters' fees
and the estimated expenses of the offering of US$3,680,500, will be
US$440,392,000 (Cdn$658,579,333 based on the Noon Buying Rate on February 27,
2003) and will be used by the Company for general corporate purposes, including
the repayment of corporate debt.
S-6
DESCRIPTION OF THE NOTES AND DEBENTURES
The following description of the particular terms of the notes and
debentures supplements and, to the extent inconsistent therewith, replaces, the
description of the Debt Securities set forth in the Prospectus under
"Description of Debt Securities", to which reference is hereby made. As used
under this caption, the term "Company" refers to Brascan Corporation, exclusive
of its subsidiaries. Other capitalized terms used and not defined in this
prospectus supplement have the meanings ascribed to them in the Prospectus.
The notes and debentures will be issued as separate series of debt
securities under an indenture, dated as of September 20, 1995, as supplemented
by a First Supplemental Indenture dated as of October 3, 1995, a Second
Supplemental Indenture dated December 15, 1998, a Third Supplemental Indenture
dated December 12, 2001, a Fourth Supplemental Indenture dated June 17, 2002, a
Fifth Supplemental Indenture to be dated March 4, 2003 (the "Fifth Supplemental
Indenture") and a Sixth Supplemental Indenture to be dated March 4, 2003 (the
"Sixth Supplemental Indenture")(as supplemented, the "Indenture"), between the
Company and Computershare Trust Company of Canada (formerly, Montreal Trust
Company of Canada), as trustee (the "Trustee"). For a description of the rights
attaching to different series of debt securities under the Indenture, see
"Description of Debt Securities" in the Prospectus. The Indenture is subject to
the provisions of the Business Corporations Act (Ontario) and, consequently, is
exempt from the operation of certain provisions of the Trust Indenture Act of
1939 pursuant to Rule 4d-9 thereunder. The following statements relating to the
notes, the debentures and the Indenture are summaries and should be read in
conjunction with the statements under "Description of Debt Securities" in the
Prospectus. Such information does not purport to be complete and is qualified in
its entirety by reference to all of the provisions of the notes, the debentures
and the Indenture, including the definition of certain terms therein.
GENERAL
The notes will be senior unsecured obligations of the Company, and will
initially be limited to US$200,000,000 aggregate principal amount, all of which
will be issued under the Fifth Supplemental Indenture. The notes will mature on
March 1, 2010. The notes will bear interest at the rate of 5.750% per annum from
March 4, 2003 or from the most recent Interest Payment Date to which interest
has been paid or provided for, payable semi-annually on March 1 and September 1
of each year, commencing September 1, 2003, to the Persons in whose name the
notes are registered at the close of business on the preceding February 15 or
August 15, as the case may be. The notes will bear interest on overdue principal
and premium, if any, and, to the extent permitted by law, overdue interest at
5.750% per annum plus 1%.
The debentures will be senior unsecured obligations of the Company, and
will initially be limited to US$250,000,000 aggregate principal amount, all of
which will be issued under the Sixth Supplemental Indenture. The debentures will
mature on March 1, 2033. The debentures will bear interest at the rate of 7.375%
per annum from March 4, 2003 or from the most recent Interest Payment Date to
which interest has been paid or provided for, payable semi-annually on March 1
and September 1 of each year, commencing September 1, 2003, to the Persons in
whose name the debentures are registered at the close of business on the
preceding February 15 or August 15, as the case may be. The debentures will bear
interest on overdue principal and premium, if any, and, to the extent permitted
by law, overdue interest at 7.375% per annum plus 1%.
Interest on the notes and debentures will be computed on the basis of a
360-day year of twelve 30-day months. Principal of, and premium, if any, and
interest on, the notes and debentures will be payable, and the notes and
debentures may be presented for registration of transfer and exchange, at the
office or agency of the Company maintained for that purpose in Toronto, Ontario,
and at any other office or agency maintained by the Company for such purpose
(and, for notes or debentures that are not represented by a Global Note (as
defined below) at the office or agency of the Company maintained for that
purpose in The City of New York), provided that at the option of the Company,
payment of interest on the notes and debentures may be made by check mailed to
the address of the Person entitled thereto as it appears in the Note Register or
by wire transfer to an account maintained by the Person entitled thereto as
specified in the Note Register.
S-7
The Company is structured as a holding company that operates through
subsidiaries. Although the notes and debentures are senior obligations of the
Company, they are effectively subordinated to all existing and future
liabilities of the Company's consolidated subsidiaries and operating companies.
The Indenture does not restrict the ability of the Company's subsidiaries to
incur additional indebtedness. Because the Company is a holding company, the
Company's ability to service its indebtedness is dependent on dividends and
other payments made on its investments. Certain of the instruments governing the
indebtedness of the companies in which the Company has an investment may
restrict the ability of such companies to pay dividends or make other payments
on investments under certain circumstances. Dividends paid in kind are excluded
so long as they are retained in the same form as received and are legally and
beneficially owned by the Company and/or one or more designated affiliates of
the Company.
REOPENING OF THE NOTES AND DEBENTURES
The Company may from time to time, without the consent of the holders of
the notes or debentures, create and issue further notes and debentures having
the same terms and conditions in all respects as the notes and debentures being
offered hereby, except for the issue date, the issue price and the first payment
of interest thereon. Additional notes or debentures issued in this manner will
be consolidated with and will form a single series with the notes or debentures,
as the case may be, being offered hereby.
OPTIONAL REDEMPTION
The notes and debentures will be redeemable, in whole or in part, at our
option at any time and from time to time at a redemption price equal to the
greater of:
- 100% of the principal amount of the notes or debentures to be redeemed,
and
- the sum of the present values of the Remaining Scheduled Payments
discounted to the date of redemption on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate plus 35 basis points in the case of the notes and 40 basis
points in the case of the debentures,
together with, in each case, accrued interest on the principal amount of the
notes or debentures to be redeemed to the date of redemption.
In connection with such optional redemption, the following defined terms
apply:
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semi-annual equivalent yield to maturity (computed
as of the second business day immediately preceding that redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for that redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the notes or debentures.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding that redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for that redemption date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations,
or (B) if the Independent Investment Banker for the notes obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
Quotations.
S-8
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by us to act as the "Independent Investment Banker".
"Reference Treasury Dealer" means Credit Suisse First Boston LLC and its
successors and one other nationally recognized investment banking firm that is a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer") specified from time to time by the Company; provided, however, that if
any of the foregoing shall cease to be a Primary Treasury Dealer, the Company
shall substitute therefor another nationally recognized investment banking firm
that is a Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker by such
Reference Treasury Dealer at 3:30 p.m., New York City time, on the third
business day preceding that redemption date.
"Remaining Scheduled Payments" means, with respect to each note or
debenture to be redeemed, the remaining scheduled payments of the principal
thereof and interest thereon that would be due after the related redemption date
but for such redemption; provided, however, that, if that redemption date is not
an interest payment date with respect to such note or debenture, the amount of
the next succeeding scheduled interest payment thereon will be reduced by the
amount of interest accrued thereon to that redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the notes or debentures to
be redeemed. On and after any redemption date, interest will cease to accrue on
the notes or debentures or any portion thereof called for redemption. On or
before any redemption date, the Company shall deposit with the trustee or with a
paying agent money sufficient to pay the redemption price of and accrued
interest on the notes or debentures to be redeemed on such date. If less than
all the notes or debentures are to be redeemed, the notes or debentures to be
redeemed shall be selected by the Trustee at the Company's direction by such
method as the Company and the Trustee shall deem fair and appropriate. The
redemption price shall be calculated by the Independent Investment Banker and
the Company, the Trustee and any paying agent for the notes or debentures shall
be entitled to rely on such calculation.
REDEMPTION FOR CHANGES IN CANADIAN WITHHOLDING TAXES
The notes and debentures will be subject to redemption as a whole, but not
in part, at the option of the Company at any time at 100% of the principal
amount, together with accrued interest thereon to the redemption date, in the
event the Company shall have received an opinion from independent tax counsel
experienced in such matters to the effect that the Company has become, or would
become, obligated to pay, on the next date on which any amount would be payable
with respect to the notes or debentures, any Additional Amounts as a result of a
change in the laws of Canada or any political subdivision or taxing authority
thereof or therein (including any regulations promulgated thereunder), or any
change in any official position regarding the application or interpretation of
such laws or regulations, which change is announced or becomes effective on or
after the date of the Fifth Supplemental Indenture or Sixth Supplemental
Indenture, as the case may be.
S-9
COVENANTS
The following covenants shall apply to the notes and debentures:
Negative Pledge
The Company will not, and will not permit any Principal Subsidiary to,
create any Lien on any of its property or assets to secure any indebtedness for
borrowed money without in any such case effectively providing that the notes and
debentures (together with, if the Company shall so determine, any other
indebtedness of the Company or such Principal Subsidiary then existing or
thereafter created which is not subordinate to the notes and debentures) shall
be secured equally and ratably with (or prior to) such secured indebtedness, so
long as such secured indebtedness shall be so secured; provided, however, that
the foregoing restrictions shall not apply to:
(a) Liens on any property or assets of any Person existing at the time
such Person becomes a Principal Subsidiary, or arising thereafter
pursuant to contractual commitments entered into prior to and not in
contemplation of such Person becoming a Principal Subsidiary;
(b) Liens on any property or assets of the Company or any Principal
Subsidiary existing at the time of acquisition thereof (including
acquisition through merger or consolidation) to secure, or securing,
the payment of all or any part of the purchase price, cost of
improvement or construction cost thereof or securing any indebtedness
incurred prior to, at the time of or within 120 days after, the
acquisition of such property or assets or the completion of any such
improvement or construction, whichever is later, for the purpose of
financing all or any part of the purchase price, cost of improvement
or construction cost thereof or to secure, or securing, the repayment
of money borrowed to pay, in whole or in part, such purchase price,
cost of improvement or construction cost or any vendor's privilege or
lien on such property securing all or any part of such purchase price,
cost of improvement or construction cost, including title retention
agreements and leases in the nature of title retention agreements
(provided such Liens are limited to such property or assets and to
improvements on such property);
(c) Liens arising by operation of law;
(d) any other Lien arising in connection with indebtedness of the Company
and Principal Subsidiaries if, after giving effect to such Lien and
any other Lien created pursuant to this clause (d), the aggregate
principal amount of indebtedness secured thereby would not exceed 5%
of the Company's Consolidated Net Worth; and
(e) any extension, renewal, substitution or replacement (or successive
extensions, renewals, substitutions or replacements), as a whole or in
part, of any of the Liens referred to in paragraphs (a) through (c)
above or any indebtedness secured thereby; provided that such
extension, renewal, substitution or replacement Lien shall be limited
to all or any part of substantially the same property or assets that
secured the Lien extended, renewed, substituted or replaced (plus
improvements on such property) and the principal amount of
indebtedness secured by such Lien at such time is not increased.
Limitation on Certain Asset Dispositions
The Company will not, and will not permit any Principal Subsidiary to, make
any disposition of assets in one or more related transactions in which the
aggregate consideration exceeds, within a twelve-month calendar period, 10% of
the Consolidated Net Worth of the Company unless (a) the Company or the
Principal Subsidiary, as the case may be, receives consideration for such
disposition at least equal to the fair market value of the assets sold or
disposed of as determined by the Board of Directors in good faith and evidenced
by a resolution of the Board of Directors filed with the Trustee and (b) all Net
Available Proceeds, less any amounts invested within one year of such
disposition in assets related to the business of the Company or in securities of
Affiliates (such amount being the "Excess Proceeds"), are applied within one
year of such disposition (i) first, at the option of the Company, to the
repayment or reduction of Debt
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ranking pari passu with the notes and debentures, (ii) second, to the extent of
remaining Excess Proceeds, after giving effect to payments made pursuant to
clause (i), if any, to make an Offer to Purchase outstanding notes and
debentures, on a pro rata basis, at a purchase price equal to 100% of the
principal amount of notes and debentures, plus accrued interest (if any) to the
date of purchase, and (iii) third, to the extent of any remaining Excess
Proceeds following the completion of such Offer to Purchase, to any other use as
determined by the Company which is not otherwise prohibited by the Indenture.
Notwithstanding the foregoing, the Company will not be required to
repurchase more than 25% of the original principal amount of the notes and
debentures pursuant to clause (ii) of the foregoing paragraph prior to the day
following the fifth anniversary of the original issuance of the notes and
debentures, and the maximum amount to be applied to the repurchase of notes or
debentures in connection with any Offer to Purchase made pursuant to clause (ii)
of the foregoing paragraph having a purchase date prior to the day following the
fifth anniversary of the original issuance of the notes and debentures shall be
the lesser of (a) the Excess Proceeds and (b) 25% of the original principal
amount of the notes and debentures less the aggregate principal amount of notes
and debentures purchased pursuant to Offers to Purchase relating to all prior
asset dispositions. In addition, the Company shall not be required to make an
Offer to Purchase any notes or debentures if (i) the amount of the Excess
Proceeds, or such lesser amount as determined in accordance with the preceding
sentence, is less than US$5 million or (ii) such repurchase or repayment is
prohibited under applicable law.
Limitation on Restricted Payments
The Company (a) will not declare or pay any dividend or make any
distribution, of any kind or character (whether in cash, property or
securities), in respect of any class of its Capital Stock or to the holders of
any class of its Capital Stock (other than dividends or distributions payable
solely in shares of its Capital Stock or in options, warrants or other rights to
acquire its Capital Stock), (b) will not, and will not permit any Subsidiary of
the Company to, directly or indirectly, purchase, redeem or otherwise acquire or
retire for value (i) any Capital Stock of the Company or (ii) any options,
warrants or rights to purchase or acquire shares of Capital Stock of the Company
and (c) will not, and will not permit any Subsidiary of the Company to, redeem,
defease (including, but not limited to, legal or covenant defeasance),
repurchase (including pursuant to any provision for repayment at the option of
the holder thereof), retire or otherwise acquire or retire for value prior to
any scheduled maturity, mandatory repayment or mandatory sinking fund payment,
Debt of the Company which is subordinate in right of payment to the notes or
debentures, if at the time thereof:
(i) an Event of Default or an event that, with the lapse of time or the
giving of notice or both, would constitute an Event of Default, shall
have occurred and be continuing, or
(ii) upon giving effect to such payment, the Consolidated Net Worth of the
Company would be less than $2 billion;
provided, however, that this provision will not be violated by reason of (i) the
payment of any dividend within 60 days after declaration thereof if, at the date
of such declaration, such payment would have complied with the foregoing
provision and (ii) any refinancing or refunding of any Debt.
Prohibition on Dividend and Other Payment Restrictions Affecting Principal
Subsidiaries
The Company will not, and will not permit any Principal Subsidiary to,
create or suffer to exist any consensual encumbrance or restriction on the
ability of any Principal Subsidiary (i) to pay, directly or indirectly,
dividends or make any other distributions in respect of its Capital Stock or pay
any Debt or other obligation owed to the Company or any Principal Subsidiary,
(ii) to make loans or advances to the Company or any Principal Subsidiary or
(iii) to transfer any of its property or assets to the Company or any other
Principal Subsidiary.
S-11
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
defined terms.
"generally accepted accounting principles" means, as at any date of
determination, generally accepted accounting principles in effect in Canada
(unless otherwise indicated) and which are applicable as of the date of
determination.
"Lien" means, with respect to any property or asset, any mortgage, charge,
hypothecation, pledge, encumbrance on, or other security interest in, such
property or asset.
"Net Available Proceeds" from any disposition of assets by any Person means
cash or readily marketable cash equivalents (including by way of sale or
discounting of a note, installment receivable or other receivable, but excluding
any other consideration received in the form of assumption by the acquiree of
Debt or other obligations relating to such assets or received in any other
non-cash form) received therefrom by such Person, net of (i) all legal, title
and recording tax expenses, commissions and other fees and expenses incurred and
all federal, state, provincial, foreign and local taxes required to be accrued
as a liability as a consequence of such disposition, (ii) all payments made by
such Person or its Subsidiaries on any Debt which is secured by such assets in
accordance with the terms of any Lien upon or with respect to such assets or
which must by the terms of such Lien, or in order to obtain a necessary consent
to such disposition or by applicable law, be repaid out of the proceeds from
such disposition, and (iii) all distributions and other payments made to or set
aside for minority interest holders in Subsidiaries of such Person or joint
ventures as a result of such disposition.
"Offer to Purchase" means a written offer (the "Offer") sent by the Company
by first class mail, postage prepaid, to each Holder at his address appearing in
the Security Register on the date of the Offer offering to purchase up to the
principal amount of notes specified in such Offer at the purchase price
specified in such Offer (as determined pursuant to the Indenture). Unless
otherwise required by applicable law, the Offer shall specify an expiration date
(the "Offer Expiration Date") of the Offer to Purchase which shall be, subject
to any contrary requirements of applicable law, not less than 30 days or more
than 60 days after the date of such Offer and a settlement date (the "Purchase
Date") for purchase of notes and debentures within five Business Days after the
Offer Expiration Date. The Company shall notify the Trustee at least 15 Business
Days (or such shorter period as is acceptable to the Trustee) prior to the
mailing of the Offer of the Company's obligation to make an Offer to Purchase,
and the Offer shall be mailed by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company. The Offer shall
contain information concerning the business of the Company and its subsidiaries
which the Company in good faith believes will enable such Holders to make an
informed decision with respect to the Offer to Purchase (which at a minimum will
include (i) the most recent annual and quarterly financial statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained in the documents required to be filed with the Trustee
pursuant to the Indenture (which requirements may be satisfied by delivery of
such documents together with the Offer), (ii) a description of material
developments in the Company's business subsequent to the date of the latest of
such financial statements referred to in clause (i) (including a description of
the events requiring the Company to make the Offer to Purchase), (iii) if
applicable, appropriate pro forma financial information concerning the Offer to
Purchase and the events requiring the Company to make the Offer to Purchase and
(iv) any other information required by applicable law to be included therein.
The Offer shall contain all instructions and materials necessary to enable such
Holders to tender notes and debentures pursuant to the Offer to Purchase. The
Offer shall also state:
1. the Section of the Indenture pursuant to which the Offer to Purchase is
being made;
2. the Offer Expiration Date and the Purchase Date;
3. the aggregate principal amount of the Outstanding notes and debentures
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined) (the "Purchase Amount");
S-12
4. the purchase price to be paid by the Company for each US$1,000 aggregate
principal amount of notes or debentures accepted for payment (as specified
pursuant to the Indenture) ("Purchase Price");
5. that the Holder may tender all or any portion of the notes or debentures
registered in the name of such Holder and that any portion of a note or
debenture tendered must be tendered in an integral multiple of US$1,000
principal amount;
6. the place or places where notes or debentures are to be surrendered for
tender pursuant to the Offer to Purchase;
7. that interest on any note or debenture not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will continue to
accrue;
8. that on the Purchase Date the Purchase Price will become due and payable
upon each note or debenture being accepted for payment pursuant to the
Offer to Purchase and that interest thereon shall cease to accrue on and
after the Purchase Date;
9. that each Holder electing to tender a note or debenture pursuant to the
Offer to Purchase will be required to surrender such note or debenture at
the place or places specified in the Offer prior to the close of business
on the Offer Expiration Date (such note or debenture being, if the Company
or the Trustee so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Trustee,
duly executed by, the Holder thereof or his attorney duly authorized in
writing);
10. that Holders will be entitled to withdraw all or any portion of notes or
debentures tendered if the Company (or its Paying Agent) receives, not later
than the close of business on the Offer Expiration Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the note or debenture the Holder tendered, the
certificate number of the note or debenture the Holder tendered and a
statement that such Holder is withdrawing all or a portion of his tender;
11. that (a) if notes or debentures in an aggregate principal amount less than
or equal to the Purchase Amount are duly tendered and not withdrawn pursuant
to the Offer to Purchase, the Company shall purchase all such notes or
debentures and (b) if notes or debentures in an aggregate principal amount
in excess of the Purchase Amount are tendered and not withdrawn pursuant to
the Offer to Purchase, the Company shall purchase notes or debentures having
an aggregate principal amount equal to the Purchase Amount on a pro rata
basis (with such adjustments as may be deemed appropriate so that only notes
and debentures in denominations of US$1,000 or integral multiples thereof
shall be purchased); and
12. that in the case of any Holder whose note or debenture is purchased only in
part, the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such note or debenture without service charge, a
new note or debenture, of any authorized denomination as requested by such
Holder, in an aggregate principal amount equal to and in exchange for the
unpurchased portion of the note or debenture so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with
the Offer for such Offer to Purchase.
"pari passu", when used with respect to the ranking of any Debt of any
Person in relation to other Debt of such Person, means that each such Debt (a)
either (i) is not subordinated in right of payment to the same Debt of such
Person or (ii) is subordinate in right of payment to the same Debt of such
Person as is the other and is so subordinate to the same extent and (b) is not
subordinate in right of payment to the other or to any Debt of such Person as to
which the other is not so subordinate.
"Principal Subsidiary" means (i) any direct or indirect Subsidiary of the
Company whose securities are not publicly traded or registered or qualified
under applicable securities laws and whose primary purpose is to hold, directly
or indirectly, or the majority of whose assets consist of direct or indirect
interests in, shares of capital stock of Noranda Inc., Nexfor Inc., Brookfield
Properties Corporation, Great
S-13
Lakes Power Inc., or Brascan Financial Corporation (formerly Trilon Financial
Corporation) at the date of issuance of the notes, and (ii) the companies
comprising Brascan Brazil.
"Subsidiary" of any Person means (i) a corporation 50% or more of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
ADDITIONAL AMOUNTS
All payments made by the Company under or with respect to the notes and
debentures will be made free and clear of, and without withholding or deduction
for or on account of, any present or future tax, duty, levy, impost, assessment
or other governmental charge imposed or levied by or on behalf of the Government
of Canada or of any province or territory thereof or by any authority or agency
therein or thereof having power to tax (hereinafter "Taxes"), unless the Company
is required to withhold or deduct Taxes by law or by the interpretation or
administration thereof. If the Company is so required to withhold or deduct any
amount for or on account of Taxes from any payment made under or with respect to
the notes or debentures and the notes or debentures are not redeemed in
accordance with the provisions described under "Redemption for Changes in
Canadian Withholding Taxes", the Company will pay such additional amounts
("Additional Amounts") as may be necessary so that the net amount received by
each Holder (including Additional Amounts) after such withholding or deduction
will not be less than the amount the Holder would have received if such Taxes
had not been withheld or deducted; provided that no Additional Amounts will be
payable with respect to a payment made to a Holder (an "Excluded Holder") (a)
with which the Company does not deal at arm's length (within the meaning of the
Income Tax Act (Canada)) at the time of making such payment or (b) which is
subject to such Taxes by reason of its being connected with Canada or any
province or territory thereof otherwise than by the mere holding of notes or
debentures or the receipt of payments thereunder. The Company will also (1) make
such withholding or deduction and (2) remit the full amount deducted or withheld
to the relevant authority in accordance with applicable law. The Company will
furnish to the Holders of the notes and debentures, within 30 days after the
date the payment of any Taxes is due pursuant to applicable law, certified
copies of tax receipts evidencing such payment by the Company. The Company will
indemnify and hold harmless each Holder (other than an Excluded Holder) and,
upon written request, will reimburse each such Holder for the amount of (i) any
Taxes so levied or imposed which have not been withheld or deducted and remitted
by the Company in accordance with applicable law and which have been paid by
such Holder in respect of payments made under or with respect to the notes and
debentures, (ii) any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto or from the failure to make such
payment and (iii) any Taxes imposed with respect to any reimbursement under
clause (i) or (ii) above, but excluding any such Taxes on such Holder's net
income.
At least 30 days prior to each date on which any payment under or with
respect to the notes is due and payable, if the Company will be obligated to pay
Additional Amounts with respect to such payment, the Company will deliver to the
Trustee an Officers' Certificate stating the fact that such Additional Amounts
will be payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional Amounts to
Holders (other than an Excluded Holder) on the payment date. Whenever in the
Indenture there is mentioned, in any context, the payment of principal (and
premium, if any), Redemption Price, Purchase Price, interest or any other amount
payable under or with respect to any note or debenture, such mention shall be
deemed to include mention of the payment of Additional Amounts to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof.
S-14
BOOK-ENTRY SYSTEM
Each of the notes and debentures will be represented by one or more Global
Notes (collectively, the "Global Notes") registered in the name of The
Depository Trust Company, or its nominee, as Depository (the "Depository"). The
provisions set forth under "Description of Debt Securities -- Registered Global
Securities" in the accompanying prospectus will be applicable to the notes and
debentures. Accordingly, beneficial interests in the notes and debentures will
be shown on, and transfers thereof will be effected only through, records
maintained by the Depository and its Participants (defined below). Except as
described under "Description of Debt Securities -- Registered Global Securities"
in the Prospectus, owners of beneficial interests in the Global Notes will not
be entitled to receive notes in definitive form and will not be considered
holders of notes or debentures under the Indenture.
The Depository has advised the Company and the underwriters as follows: The
Depository is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. The Depository was created to hold securities of participating
organizations ("Participants") and to facilitate the clearance and settlement of
securities transactions, such as transfers and pledges, among Participants in
deposited securities through electronic computerized book-entry changes in
accounts of Participants, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers
(including the underwriters), banks, trust companies, clearing corporations and
certain other organizations. The Depository is a wholly owned subsidiary of The
Depositary Trust & Clearing Corporation, which in turn is owned by a number of
Participants and members of the National Securities Clearing Corporation,
Government Securities Clearing Corporation, MBS Clearing Corporation and
Emerging Markets Clearing Corporation as well as by the New York Stock Exchange
Inc., the American Stock Exchange LLC and the National Association of Securities
Dealers Inc. Access to the Depository's book-entry system is also available to
others such as securities brokers and dealers, banks, trust companies and
clearing corporations that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly ("Indirect Participants").
Persons who are not Participants may beneficially own securities held by the
Depository only through Participants or Indirect Participants. The rules
applicable to the Depository and Participants are on file with the Securities
and Exchange Commission.
Principal and interest payments on the notes and debentures registered in
the name of the Depository's nominee will be made in immediately available funds
to the Depository's nominee as the registered owner of the Global Notes. Under
the terms of the Indenture, the Company and the Trustee will treat the persons
in whose names the notes and debentures are registered as the owners of such
notes and debentures for the purpose of receiving payment of principal and
interest on such notes and debentures and for all other purposes whatsoever.
Therefore, neither the Company, the Trustee nor any paying agent for the notes
or debentures has any direct responsibility or liability for the payment of
principal or interest on the notes or debentures to owners of beneficial
interests in the Global Notes. The Depository has advised the Company and the
Trustee that its current practice is, upon receipt of any payment of principal
or interest, to credit the accounts of Participants on the payment date with
such payment in amounts proportionate to their respective beneficial interests
in the principal amount of the Global Notes as shown in the records of the
Depository, unless the Depository has reason to believe that it will not receive
payment on the payment date. Payments by Participants and Indirect Participants
to owners of beneficial interests in the Global Notes will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the responsibility of the Participants or Indirect
Participants, and not of the Depository, the Trustee or the Company, subject to
any statutory requirements as may be in effect from time to time. Payment of
principal and interest to the Depository is the responsibility of the Company or
the Trustee, disbursement of such payments to Participants shall be the
responsibility of the Depository, and the disbursement of such payments to the
owners of beneficial interests in the Global Notes shall be the responsibility
of Participants.
S-15
The Company understands that, under existing industry practice, if the
Company were to request any action by the Holders or if an owner of a beneficial
interest in the Global Notes were to desire to take any action that the
Depository, as the registered owner of the Global Notes, is entitled to take,
the Depository would authorize Participants to take such action, and that
Participants would, in turn, authorize beneficial owners owning through them to
take such action or would otherwise act upon the instructions of such beneficial
owners.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Torys LLP, under the existing laws of Canada and the
current administrative practice of the Canada Customs and Revenue Agency, the
payment by the Company of interest, principal or premium on the notes or
debentures to a holder who is a non-resident of Canada and with whom the Company
deals at arm's length within the meaning of the Income Tax Act (Canada) (the
"Act") at the time of making the payment will be exempt from Canadian
withholding tax. For the purposes of the Act, related persons (as therein
defined) are deemed not to deal at arm's length, and it is a question of fact
whether persons not related to each other deal at arm's length.
No other tax on income (including taxable capital gains) will be payable
under the Act in respect of the holding, redemption or disposition of the notes
or debentures or the receipt of interest or premium thereon by holders who are
neither residents nor deemed to be residents of Canada for the purposes of the
Act and who do not use or hold and are not deemed to use or hold the notes or
debentures in carrying on business in Canada for the purposes of the Act. This
summary does not apply to an insurance company that carries on business in
Canada and elsewhere.
This summary is of a general nature only and does not take into account tax
legislation or considerations of any province or territory of Canada or of any
jurisdiction other than Canada. Purchasers of the notes and debentures should
consult their own tax advisors with respect to their particular circumstances.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal U.S. federal income tax
consequences of the acquisition, ownership and disposition of a note or
debenture by an initial purchaser thereof that is, for U.S. federal income tax
purposes, an individual citizen or resident of the United States, a corporation
created or organized in or under the laws of the United States or any political
subdivision thereof, an estate, the income of which is subject to U.S. federal
income taxation regardless of its source, and any trust if (i) a U.S. court is
able to exercise primary supervision over the administration of the trust and
(ii) one or more U.S. persons have the authority to control all substantial
decisions of the trust or if the trust has validly made an election to be
treated as a U.S. person under applicable Treasury Regulations (a "U.S.
Holder"). This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), administrative pronouncements, judicial decisions, existing and
proposed Treasury Regulations, and interpretations of the foregoing, as in
effect on the date hereof, all of which are subject to change (possibly with
retroactive effect) and differing interpretations. This summary discusses only
notes and debentures held as capital assets within the meaning of Section 1221
of the Code. This summary is intended for general information only and does not
discuss all of the tax consequences that may be relevant based on the particular
circumstances of a U.S. Holder or to U.S. Holders subject to special tax rules,
such as banks, tax-exempt organizations, insurance companies, dealers in
securities or foreign currency, or persons that hold notes or debentures that
are a hedge or that are hedged against currency risks or that are part of a
straddle or conversion transaction. This summary also does not address the tax
consequences to shareholders, partners or beneficiaries in any entity that holds
notes or debentures. Prospective purchasers of notes and debentures should
consult their own tax advisors concerning the application of U.S. federal income
tax law, as well as the laws of any state, local or foreign taxing jurisdiction,
to their particular situations. See "Certain Canadian Federal Income Tax
Considerations".
S-16
For U.S. federal income tax purposes, interest (including Additional
Amounts, if any, and any Canadian withholding taxes paid by the Company) on a
note or debenture generally will be taxable to a U.S. Holder as ordinary income
at the time received or accrued, in accordance with such holder's method of
accounting for such tax purposes. Interest paid by the Company on the notes and
debentures will generally constitute income from sources outside the United
States and, with certain exceptions, will be "passive" or "financial services"
income which is treated separately from other types of income for purposes of
computing the foreign tax credit allowable to a U.S. Holder. A U.S. Holder's
ability to claim a foreign tax credit is subject to numerous limitations, and,
because of the complexity of these limitations, U.S. Holders should consult
their own tax advisors with respect to the amount of foreign taxes that may be
claimed as a credit.
Upon the sale, exchange or redemption of a note or debenture, a U.S. Holder
will recognize gain or loss, if any, for U.S. federal income tax purposes, equal
to the difference between the amount realized on such sale, exchange or
redemption (other than amounts received that are attributable to accrued but
unpaid interest and taxed as interest, described above) and such U.S. Holder's
adjusted tax basis in the note. Such gain or loss generally will constitute
capital gain or loss and will be long-term capital gain or loss if the note or
debenture was held by such U.S. Holder for more than one year.
Gains recognized by a U.S. Holder on a sale or other disposition of the
notes or debentures generally will be treated as U.S. source income for U.S.
foreign tax credit purposes.
In general, information reporting requirements will apply to interest and
to the proceeds received on the disposition of the notes or debentures paid
within the United States (and in certain cases, outside the United States) to
U.S. Holders. A backup withholding tax (30% in 2003, 29% for payments made in
2004 and 2005 and 28% for payments made in 2006 through 2010, and 31% for
payments made in 2011 and thereafter) may apply to such amounts if a U.S. Holder
(i) fails to establish properly that it is entitled to an exemption, (ii) fails
to furnish or certify his or her correct taxpayer identification number to the
payer in the manner required, (iii) is notified by the IRS that he or she has
failed to report payments of interest or dividends properly or (iv) under
certain circumstances, fails to certify that he or she has been notified by the
IRS that he or she is subject to backup withholding for failure to report
interest or dividend payments. The amount of any backup withholding will be
allowed as a credit against the U.S. Holder's U.S. federal income tax liability.
The preceding discussion of certain United States federal income tax
consequences is for general information only and is not tax advice. Accordingly,
U.S. Holders should consult their own tax advisors as to the particular tax
consequences to them of purchasing, holding and disposing of the notes and
debentures, including the applicability and effect of any federal, state, local
or foreign tax laws and of any proposed changes in applicable law.
S-17
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated February 27, 2003, we have agreed to sell to the underwriters
named below, for whom Credit Suisse First Boston LLC is acting as
representative, the following respective principal amounts of notes and
debentures:
PRINCIPAL PRINCIPAL
AMOUNT AMOUNT
UNDERWRITER OF NOTES OF DEBENTURES
----------- -------------- --------------
Credit Suisse First Boston LLC.................. $ 90,000,000 $ 112,500,000
Salomon Smith Barney Inc. ...................... 55,000,000 68,750,000
Banc One Capital Markets, Inc................... 22,000,000 27,500,000
BNP Paribas Securities Corp..................... 22,000,000 27,500,000
HSBC Securities (USA) Inc. ..................... 4,000,000 5,000,000
Utendahl Capital Partners, L.P. ................ 4,000,000 5,000,000
Trilon International Inc........................ 3,000,000 3,750,000
-------------- --------------
Total........................................... US$200,000,000 US$250,000,000
============== ==============
The underwriting agreement provides that the underwriters are obligated to
purchase all of the notes and debentures if any are purchased. The underwriting
agreement also provides that if an underwriter defaults, the purchase
commitments of the non-defaulting underwriters may be increased or the offering
of the notes and debentures may be terminated.
The underwriters propose to offer the notes and debentures initially at the
public offering price on the cover page of this prospectus supplement and to
selling group members at that price less a selling concession of .375% of the
principal amount per note and .50% of the principal amount per debenture. The
underwriters and selling group members may allow a discount of .25% of the
principal amount per note and per debenture on sales to other brokers/dealers.
After the initial public offering, the underwriters may change the public
offering price and concession and discount to brokers/dealers.
We estimate that our out-of-pocket expenses for this offering will be
approximately US$243,000.
The notes and debentures are new issues of securities with no established
trading market and will not be listed on any national securities exchange. One
or more of the underwriters intends to make a secondary market for the notes and
debentures. However, they are not obligated to do so and may discontinue making
a secondary market for the notes and debentures at any time without notice. No
assurance can be given as to how liquid the trading market for the notes and
debentures will be.
The notes and debentures will not be qualified for sale under the
securities laws of Canada or any province or territory of Canada and may not be
offered or sold, directly or indirectly, in Canada or to residents of Canada in
contravention of the securities laws of any province or territory of Canada.
Each underwriter has agreed that it will not, directly or indirectly, offer,
sell or deliver any notes or debentures purchased by it, in Canada or to
residents of Canada in contravention of the securities laws of any province or
territory of Canada and that any selling agreement or similar agreement with
respect to the notes or debentures will require each dealer or other party
thereto to make an agreement to the same effect.
Trilon International Inc. is a wholly owned subsidiary of Brascan Financial
Corporation, which is a wholly owned subsidiary of the Company. Accordingly, the
Company is a related issuer of Trilon International Inc. within the meaning of
applicable Canadian securities legislation. Trilon International Inc. will not
receive any benefit in connection with this offering, other than its portion of
the commissions, if any, payable as described above. Trilon International Inc.
did not propose this offering to the Company.
Trilon International Inc. is not registered as a broker-dealer under the
securities laws of the United States and will not participate in the offering of
the notes or debentures in the United States.
S-18
We have agreed to indemnify the underwriters against liabilities under the
Securities Act of 1933 or contribute to payments that the underwriters may be
required to make in that respect.
In the ordinary course of their respective businesses, the underwriters and
their affiliates may have engaged, and may engage in the future, in commercial
banking and/or investment banking transactions with us and our affiliates for
which they received or will receive customary fees.
In connection with the offering, the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.
- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
- Over-allotment involves sales by the underwriters of notes or debentures
in excess of the principal amount of notes or debentures the
underwriters are obligated to purchase, which creates a syndicate short
position.
- Syndicate covering transactions involve purchases of notes or debentures
in the open market after the distribution has been completed in order to
cover syndicate short positions.
- Penalty bids permit the underwriters to reclaim a selling concession
from a syndicate member when the notes or debentures originally sold by
such syndicate member are purchased in a stabilizing or a syndicate
covering transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty bids
may have the effect of raising or maintaining the market price of the notes or
debentures or preventing or retarding a decline in the market price of the notes
or debentures. As a result, the price of the notes and debentures may be higher
than the price that might otherwise exist in the open market. These
transactions, if commenced, may be discontinued at any time.
Credit Suisse First Boston LLC will make notes and debentures available for
distribution on the Internet through a proprietary web site and/or a third-party
system operated by Market Axess Inc., an Internet-based communications
technology provider. Market Axess Inc. is providing the system as a conduit for
communications between Credit Suisse First Boston LLC and its customers and is
not a party to any transactions. We do not believe that Market Axess Inc. will
function as an underwriter or agent of us, nor do we believe that Market Axess
Inc. will act as a broker for any customer of Credit Suisse First Boston LLC.
Market Axess Inc., a registered broker-dealer, will receive compensation through
Credit Suisse First Boston LLC based on transactions the underwriter conducts
through the system. Credit Suisse First Boston LLC will make notes and
debentures available to its customers through the Internet distributions,
whether made through a proprietary or third party system, on the same terms as
distributions made through other channels.
RISK FACTORS
Before making an investment decision investors should carefully consider
the risks and uncertainties described below and under the heading "Business
Environment and Risks" in the Company's Annual Report incorporated by reference
herein. These risks and uncertainties are not the only ones facing the Company.
Additional risks and uncertainties not presently known to the Company or that
the Company currently deems immaterial may also impair its business operations.
If any of such risks actually occur, the Company's business, financial condition
and operating results could be materially harmed.
BANKRUPTCY, LIQUIDATION OR REORGANIZATION OF THE COMPANY'S SUBSIDIARIES
In the event of a bankruptcy, liquidation or reorganization of any of the
Company's subsidiaries, holders of their indebtedness and their trade creditors
will generally be entitled to payment of their claims from the assets of those
subsidiaries before any assets are made available for distribution to the
Company.
S-19
NO PRIOR PUBLIC MARKET FOR THE NOTES OR DEBENTURES
Prior to this offering, there was no public market for the notes or
debentures. The Company has been informed by the underwriters that they intend
to make a market in the notes and debentures after this offering is completed.
However, the underwriters may cease their market-making at any time. In
addition, the liquidity of the trading market in the notes and debentures and
the market price quoted for the notes and debentures may be adversely affected
by changes in the overall market for debt securities and by changes in the
Company's financial performance or prospects or in the prospects for companies
in the Company's industry generally. As a result, purchasers of notes and
debentures cannot be sure that an active trading market will develop for the
notes and debentures.
LEGAL PROCEEDINGS
From time to time, Brascan is involved in litigation, investigations or
proceedings relating to claims arising out of its operations.
CREDIT RATINGS
The Company's long-term unsecured debt securities are rated Baa3 by Moody's
Investors Service Inc. ("Moody's"), A- by Standard & Poor's Corporation ("S&P")
and A (low) by Dominion Bond Rating Service ("DBRS") (each a "Rating Agency").
Moody's, S&P and DBRS have rated these notes and debentures Baa3, A- and A
(low), respectively.
Moody's credit ratings are on a long-term debt rating scale that ranges
from Aaa to C, which represents the range from highest to lowest quality of such
securities rated. According to the Moody's rating system, debt securities rated
"Baa3" are considered investment grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future. Moody's
applies numerical modifiers 1, 2 and 3 in each generic rating classification
from Aa through Caa in its corporate bond rating system. The modifier 1
indicates that the issue ranks in the higher end of its generic rating category,
the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.
S&P's credit ratings are on a long-term debt rating scale that ranges from
AAA to D, which represents the range from highest to lowest quality of such
securities rated. According to the S&P rating system, an obligation rated "A" is
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than obligations in higher rated categories. However, the
obligor's capacity to meet its financial commitment on the obligations is still
strong. The ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within the major rating categories.
DBRS' credit ratings are on a long-term debt rating scale that ranges from
AAA to D, which represents the range from highest to lowest quality of such
securities rated. According to the DBRS rating system, an obligation rated "A"
is satisfactory credit quality. Protection of interest and principal is still
substantial, but the degree of strength is less than with AA rated entities. The
ratings from AA to CCC may be modified by the addition of a (high) or (low)
modifier to show relative standing within the major rating categories.
The credit ratings accorded to the notes and debentures by the Rating
Agencies are not recommendations to purchase, hold or sell the notes or
debentures inasmuch as such ratings do not comment as to market price or
suitability for a particular investor. There is no assurance that any rating
will remain in effect for any given period of time or that any rating will not
be revised or withdrawn entirely by a Rating Agency in the future if, in its
judgment, circumstances so warrant.
S-20
EARNINGS COVERAGE RATIOS
The earnings coverage ratios have been calculated based on instruments
classified as debt under current Canadian GAAP. Pursuant to Canadian GAAP, an
aggregate of $349 million and $224 million of unsecured junior subordinated
debentures and convertible notes are included in shareholders' equity as at
September 30, 2002 and December 31, 2001, respectively and the distributions
thereon are charged, on an after tax basis, to retained earnings. Based on this
presentation, and after giving effect to the issue of the notes and debentures
under this offering and the application of the estimated net proceeds thereof,
Brascan's interest requirements for the 12 month periods ended September 30,
2002 and December 31, 2001 amounted to $648 million and $299 million
respectively. Brascan's earnings before interest and income tax for the 12 month
periods ended September 30, 2002 and December 31, 2001 were $1,051 million and
$570 million, respectively, which are approximately 1.6 times and 1.9 times
Brascan's aggregate interest requirements for the respective periods.
The earnings coverage ratios in the preceding paragraph have been
calculated without the annual carrying charges relating to the unsecured junior
subordinated debentures and convertible notes. If the unsecured junior
subordinated debentures and convertible notes were classified as debt, their
entire pre-tax carrying charges would be included in interest expense. If the
annual carrying charges had been included in the calculations, the impact on the
earnings coverage ratios for the 12 month periods ended September 30, 2002 and
December 31, 2001 would have been negligible with the ratios remaining at
approximately 1.6 times and 1.9 times, respectively.
LEGAL MATTERS
The validity of the notes and debentures being offered hereby will be
passed upon for the Company by Torys LLP of Toronto, Ontario, and New York, New
York, with respect to certain matters of Canadian law and of United States law,
and for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP of Toronto,
Ontario, with respect to certain matters of United States law.
S-21
AMENDMENT NO. 2 DATED FEBRUARY 17, 2003 TO THE SHORT FORM SHELF PROSPECTUS DATED
NOVEMBER 29, 2001
This Amendment, together with the Short Form Shelf Prospectus dated November 29,
2001, constitutes a public offering of these securities only in those
jurisdictions where they may be lawfully offered for sale and therein only by
persons permitted to sell such securities. No securities regulatory authority
has expressed an opinion about these securities and it is an offence to claim
otherwise.
[BRASCAN CORPORATION LOGO]
DEBT SECURITIES
US$1,400,000,000
The short form shelf prospectus (the "Prospectus") dated November 29, 2001
of Brascan Corporation as amended by Amendment No. 1 dated June 7, 2002, is
amended by providing that the maximum aggregate offering amount of debt
securities that may be offered and issued from time to time under the Prospectus
is increased from US$900,000,000 to US$1,400,000,000 and, in particular,
deleting the references to US$900,000,000 contained on the face page of the
Prospectus and substituting therefor "US$1,400,000,000". The first paragraph of
the text on the face page of the Prospectus, as so amended, reads as follows:
"Debt securities (the "Debt Securities") of Brascan Corporation (the
"Company") may be offered hereunder in one or more series in an
aggregate principal amount of up to U.S.$1,400,000,000 (or the
equivalent in other currencies or currency units) or, if any Debt
Securities are offered at an original issue discount, such greater
amount as shall result in an aggregate offering price of
U.S.$1,400,000,000. Debt Securities of any series may be offered in
such amount and with such terms as may be determined in light of
market conditions. The specific designation, aggregate principal
amount, denomination (which may be in United States dollars, in any
other currency or in units based on or relating to foreign
currencies), maturity, rate (which may be fixed or variable) and time
of payment of interest, if any, any terms for redemption at the option
of the Company or the holders, any terms for sinking fund payments,
any listing on a securities exchange, the initial public offering
price (or the manner of determination thereof if offered on a
non-fixed price basis) and any other terms in connection with the
offering and sale of each series of Debt Securities in respect of
which this Prospectus is being delivered (the "Offered Securities")
will be set forth in a supplement to this Prospectus relating thereto
(a "Prospectus Supplement")."
PURCHASERS' STATUTORY RIGHTS
Securities legislation in certain of the provinces of Canada provides
purchasers with the right to withdraw from an agreement to purchase securities
within two business days after receipt or deemed receipt of a prospectus and any
amendment. In several of the provinces, securities legislation further provides
a purchaser with remedies for rescission or, in some jurisdictions, damages if
the prospectus and any amendment contain a misrepresentation or are not
delivered to the purchaser, but such remedies must be exercised by the purchaser
within the time limit prescribed by the securities legislation of the
purchaser's province. A purchaser should refer to any applicable provisions of
the securities legislation of the purchaser's province for the particulars of
these rights or consult with a legal advisor.
AMENDMENT NO. 1 DATED JUNE 7, 2002 TO THE SHORT FORM SHELF PROSPECTUS DATED
NOVEMBER 29, 2001
This Amendment, together with the Short Form Shelf Prospectus dated November 29,
2001, constitutes a public offering of these securities only in those
jurisdictions where they may be lawfully offered for sale and therein only by
persons permitted to sell such securities. No securities regulatory authority
has expressed an opinion about these securities and it is an offence to claim
otherwise.
[BRASCAN CORPORATION LOGO]
DEBT SECURITIES
US$900,000,000
The short form shelf prospectus (the "Prospectus") dated November 29, 2001
of Brascan Corporation is amended by providing that the maximum aggregate
offering amount of debt securities that may be offered and issued from time to
time under the Prospectus is increased from US$500,000,000 to US$900,000,000
and, in particular, deleting the references to US$500,000,000 contained on the
face page of the Prospectus and substituting therefor "US$900,000,000". The
first paragraph of the text on the face page of the Prospectus, as so amended,
reads as follows:
"Debt securities (the "Debt Securities") of Brascan Corporation (the
"Company") may be offered hereunder in one or more series in an
aggregate principal amount of up to U.S.$900,000,000 (or the
equivalent in other currencies or currency units) or, if any Debt
Securities are offered at an original issue discount, such greater
amount as shall result in an aggregate offering price of
U.S.$900,000,000. Debt Securities of any series may be offered in such
amount and with such terms as may be determined in light of market
conditions. The specific designation, aggregate principal amount,
denomination (which may be in United States dollars, in any other
currency or in units based on or relating to foreign currencies),
maturity, rate (which may be fixed or variable) and time of payment of
interest, if any, any terms for redemption at the option of the
Company or the holders, any terms for sinking fund payments, any
listing on a securities exchange, the initial public offering price
(or the manner of determination thereof if offered on a non-fixed
price basis) and any other terms in connection with the offering and
sale of each series of Debt Securities in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set
forth in a supplement to this Prospectus relating thereto (a
"Prospectus Supplement")."
PURCHASERS' STATUTORY RIGHTS
Securities legislation in certain of the provinces of Canada provides
purchasers with the right to withdraw from an agreement to purchase securities
within two business days after receipt or deemed receipt of a prospectus and any
amendment. In several of the provinces, securities legislation further provides
a purchaser with remedies for rescission or, in some jurisdictions, damages if
the prospectus and any amendment contain a misrepresentation or are not
delivered to the purchaser, but such remedies must be exercised by the purchaser
within the time limit prescribed by the securities legislation of the
purchaser's province. A purchaser should refer to any applicable provisions of
the securities legislation of the purchaser's province for the particulars of
these rights or consult with a legal advisor.
This short form prospectus has been filed under legislation in each of the
provinces of Canada that permits certain information about these securities to
be determined after this prospectus has become final and that permits the
omission from this prospectus of that information. The legislation requires the
delivery to purchasers of a prospectus supplement containing the omitted
information within a specified period of time after agreeing to purchase any of
these securities.
No securities regulatory authority has expressed an opinion about these
securities and it is an offence to claim otherwise. This short form prospectus
constitutes a public offering of these securities only in those jurisdictions
where they may be lawfully offered for sale and therein only by persons
permitted to sell such securities. INFORMATION HAS BEEN INCORPORATED BY
REFERENCE IN THIS PROSPECTUS FROM DOCUMENTS FILED WITH SECURITIES COMMISSIONS OR
SIMILAR AUTHORITIES IN CANADA. Copies of the documents incorporated herein by
reference may be obtained on request without charge from the office of the
Corporate Secretary of the Company at Suite 4400, BCE Place, 181 Bay Street,
Toronto, Ontario, Canada, M5J 2T3, (416) 363-9491.
BASE SHELF PROSPECTUS
FINAL SHORT FORM PROSPECTUS DATED NOVEMBER 29, 2001
US$500,000,000
[BRASCAN CORPORATION LOGO]
DEBT SECURITIES
------------------------
Debt securities (the "Debt Securities") of Brascan Corporation (the
"Company") may be offered hereunder in one or more series in an aggregate
principal amount of up to U.S.$500,000,000 (or the equivalent in other
currencies or currency units) or, if any Debt Securities are offered at an
original issue discount, such greater amount as shall result in an aggregate
offering price of U.S.$500,000,000. Debt Securities of any series may be offered
in such amount and with such terms as may be determined in light of market
conditions. The specific designation, aggregate principal amount, denomination
(which may be in United States dollars, in any other currency or in units based
on or relating to foreign currencies), maturity, rate (which may be fixed or
variable) and time of payment of interest, if any, any terms for redemption at
the option of the Company or the holders, any terms for sinking fund payments,
any listing on a securities exchange, the initial public offering price (or the
manner of determination thereof if offered on a non-fixed price basis) and any
other terms in connection with the offering and sale of each series of Debt
Securities in respect of which this Prospectus is being delivered (the "Offered
Securities") will be set forth in a supplement to this Prospectus relating
thereto (a "Prospectus Supplement").
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THIS OFFERING IS MADE BY A CANADIAN ISSUER THAT IS PERMITTED, UNDER A
MULTIJURISDICTIONAL DISCLOSURE SYSTEM ADOPTED BY THE UNITED STATES, TO PREPARE
THIS PROSPECTUS IN ACCORDANCE WITH THE DISCLOSURE REQUIREMENTS OF ITS HOME
COUNTRY. PROSPECTIVE INVESTORS SHOULD BE AWARE THAT SUCH REQUIREMENTS ARE
DIFFERENT FROM THOSE OF THE UNITED STATES. THE FINANCIAL STATEMENTS INCLUDED OR
INCORPORATED HEREIN HAVE BEEN PREPARED IN ACCORDANCE WITH CANADIAN GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES, AND ARE SUBJECT TO CANADIAN AUDITING AND AUDITOR
INDEPENDENCE STANDARDS, AND THUS MAY NOT BE COMPARABLE TO FINANCIAL STATEMENTS
OF UNITED STATES COMPANIES.
PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THE ACQUISITION OF THE DEBT
SECURITIES MAY HAVE TAX CONSEQUENCES BOTH IN THE UNITED STATES AND IN CANADA.
SUCH CONSEQUENCES FOR INVESTORS WHO ARE RESIDENT IN, OR CITIZENS OF, THE UNITED
STATES MAY NOT BE DESCRIBED FULLY HEREIN OR IN A PROSPECTUS SUPPLEMENT.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THEIR PARTICULAR CIRCUMSTANCES.
THE ENFORCEMENT BY INVESTORS OF CIVIL LIABILITIES UNDER THE FEDERAL
SECURITIES LAWS MAY BE AFFECTED ADVERSELY BY THE FACT THAT THE COMPANY IS
INCORPORATED OR ORGANIZED UNDER THE LAWS OF THE PROVINCE OF ONTARIO, THAT SOME
OR ALL OF ITS OFFICERS AND DIRECTORS MAY BE RESIDENTS OF CANADA, THAT SOME OR
ALL OF THE UNDERWRITERS OR EXPERTS NAMED IN THE REGISTRATION STATEMENT MAY BE
RESIDENTS OF CANADA AND THAT ALL OR A SUBSTANTIAL PORTION OF THE ASSETS OF THE
COMPANY AND SAID PERSONS MAY BE LOCATED OUTSIDE THE UNITED STATES.
The Company may sell Debt Securities to or through underwriters or dealers
or directly to investors or through agents. The Prospectus Supplement relating
to each series of Offered Securities will identify each person who may be deemed
to be an underwriter with respect to such series and will set forth the terms of
the offering of such series, including, to the extent applicable, the initial
public offering price, the proceeds to the Company, the underwriting commissions
and any other concessions to be allowed or reallowed to dealers. The managing
underwriter or underwriters with respect to each series sold to or through
underwriters will be named in the related Prospectus Supplement.
The date of this Prospectus is November 29, 2001.
TABLE OF CONTENTS
PAGE
----
Documents Incorporated by Reference......................... 2
Available Information....................................... 4
Special Note Regarding Forward-Looking Information.......... 4
The Company................................................. 4
Use of Proceeds............................................. 5
Earnings Coverage Ratios.................................... 5
Description of Debt Securities.............................. 6
Plan of Distribution........................................ 15
Legal Matters............................................... 15
Experts..................................................... 16
Documents Filed as Part of the Registration Statement....... 16
In this Prospectus, unless the context otherwise indicates, references to
the "Company" refer to Brascan Corporation and references to "Brascan" refer to
the Company and its direct and indirect subsidiaries.
All dollar amounts set forth in this Prospectus and any Prospectus
Supplement are in Canadian dollars, except where otherwise indicated. The
following table sets forth, for each period indicated, information concerning
the exchange rates between U.S. dollars and Canadian dollars based on the
inverse of the noon buying rate in the City of New York on the last business day
of each month during the period for cable transfers as certified for customs
purposes by the Federal Reserve Bank of New York (the "noon buying rate"). The
table illustrates how many U.S. dollars it would take to buy one Canadian
dollar. On November 28, 2001, the inverse noon buying rate was U.S.$0.6308 per
Cdn.$1.00.
YEARS ENDED DECEMBER 31
-------------------------------------
2000 1999 1998 1997 1996
----- ----- ----- ----- -----
Low............................................ .6410 .6535 .6341 .6945 .7235
High........................................... .6969 .6925 .7105 .7487 .7513
Average(1)..................................... .6725 .6744 .6714 .7199 .7330
Period End..................................... .6669 .6925 .6504 .6999 .7301
---------------
NOTE:
(1) The average of the daily noon buying rates on the last business day of each
month during the applicable period.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, filed with the securities regulatory authorities
in each of the provinces of Canada, are specifically incorporated by reference
in, and form an integral part of, this Prospectus:
(a) the Company's annual information form dated May 15, 2001;
(b) the unaudited comparative consolidated financial statements of the
Company contained in the interim report to shareholders for the nine
months ended September 30, 2001;
(c) the audited comparative consolidated financial statements of the
Company and the notes thereto for the financial year ended December 31,
2000, together with the report of the auditors thereon, found at pages
41 through 56 of Brascan's 2000 annual report;
(d) the financial analysis and review section contained in pages 19 to 40
of the Company's 2000 annual report;
(e) management's discussion and analysis of financial condition and results
of operations dated November 7, 2001 contained in the interim report to
shareholders for the nine months ended September 30, 2001; and
2
(f) the Company's management information circular dated February 28, 2001
in connection with the April 27, 2001 Annual and Special Meeting of
Shareholders, other than the sections entitled "Executive Compensation"
and "Performance Graph".
ALL DOCUMENTS OF THE COMPANY OF THE TYPE REFERRED TO ABOVE AND ANY MATERIAL
CHANGE REPORTS (EXCLUDING CONFIDENTIAL REPORTS) WHICH ARE REQUIRED TO BE FILED
BY THE COMPANY WITH THE ONTARIO SECURITIES COMMISSION AFTER THE DATE OF THIS
PROSPECTUS AND PRIOR TO THE TERMINATION OF THE OFFERING SHALL BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. IN ADDITION, ANY REPORT ON FORM
6-K OR FORM 40-F FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") AFTER THE DATE OF THIS PROSPECTUS SHALL BE DEEMED
TO BE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS IF AND TO THE EXTENT
EXPRESSLY PROVIDED IN SUCH REPORT.
ANY STATEMENT CONTAINED IN A DOCUMENT INCORPORATED OR DEEMED TO BE
INCORPORATED BY REFERENCE HEREIN SHALL BE DEEMED TO BE MODIFIED OR SUPERSEDED
FOR THE PURPOSES OF THIS PROSPECTUS TO THE EXTENT THAT A STATEMENT CONTAINED
HEREIN OR IN ANY OTHER SUBSEQUENTLY FILED DOCUMENT WHICH ALSO IS OR IS DEEMED TO
BE INCORPORATED BY REFERENCE HEREIN MODIFIES OR SUPERSEDES SUCH STATEMENT. THE
MODIFYING OR SUPERSEDING STATEMENT NEED NOT STATE THAT IT HAS MODIFIED OR
SUPERSEDED A PRIOR STATEMENT OR INCLUDE ANY OTHER INFORMATION SET FORTH IN THE
DOCUMENT THAT IT MODIFIES OR SUPERSEDES. THE MAKING OF A MODIFYING OR
SUPERSEDING STATEMENT SHALL NOT BE DEEMED AN ADMISSION FOR ANY PURPOSES THAT THE
MODIFIED OR SUPERSEDED STATEMENT, WHEN MADE, CONSTITUTED A MISREPRESENTATION, AN
UNTRUE STATEMENT OF A MATERIAL FACT OR AN OMISSION TO STATE A MATERIAL FACT THAT
IS REQUIRED TO BE STATED OR THAT IS NECESSARY TO MAKE A STATEMENT NOT MISLEADING
IN LIGHT OF THE CIRCUMSTANCES IN WHICH IT WAS MADE. ANY STATEMENT SO MODIFIED OR
SUPERSEDED SHALL NOT BE DEEMED, EXCEPT AS SO MODIFIED OR SUPERSEDED, TO
CONSTITUTE A PART OF THIS PROSPECTUS.
UPON A NEW ANNUAL INFORMATION FORM AND NEW ANNUAL FINANCIAL STATEMENTS
BEING FILED WITH AND, WHERE REQUIRED, ACCEPTED BY THE APPLICABLE SECURITIES
REGULATORY AUTHORITIES DURING THE CURRENCY OF THIS PROSPECTUS, THE PREVIOUS
ANNUAL INFORMATION FORM, THE PREVIOUS ANNUAL FINANCIAL STATEMENTS AND ALL
INTERIM FINANCIAL STATEMENTS, MATERIAL CHANGE REPORTS AND INFORMATION CIRCULARS
FILED PRIOR TO THE COMMENCEMENT OF THE THEN CURRENT FISCAL YEAR WILL BE DEEMED
NO LONGER TO BE INCORPORATED INTO THIS PROSPECTUS FOR PURPOSES OF FUTURE OFFERS
AND SALES OF DEBT SECURITIES HEREUNDER.
A Prospectus Supplement containing the specific terms of an offering of
Debt Securities will be delivered to purchasers of such Debt Securities together
with this Prospectus and will be deemed to be incorporated into this Prospectus
as of the date of such Prospectus Supplement but only for purposes of the
offering of Debt Securities covered by that Prospectus Supplement.
Where the Company updates its disclosure of earnings coverage ratios by a
Prospectus Supplement, the Prospectus Supplement filed with applicable
securities regulatory authorities that contains the most recent updated
disclosure of earnings coverage ratios and any Prospectus Supplement supplying
any additional or updated information the Company may elect to include (provided
that such information does not describe a material change that has not already
been the subject of a material change report or a prospectus amendment) will be
delivered to purchasers of Debt Securities together with this Prospectus and
will be deemed to be incorporated into this Prospectus as of the date of the
Prospectus Supplement.
Prospective investors should rely only on the information incorporated by
reference or contained in this Prospectus or any Prospectus Supplement and on
the other information included in the Registration Statement on Form F-9
relating to the Debt Securities and of which this Prospectus is a part. The
Company has not authorized anyone to provide different or additional
information.
COPIES OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE MAY BE OBTAINED ON
REQUEST WITHOUT CHARGE FROM THE CORPORATE SECRETARY OF THE COMPANY AT SUITE
4400, BCE PLACE, 181 BAY STREET, TORONTO, ONTARIO, CANADA, M5J 2T3 (TELEPHONE:
(416) 363-9491).
3
AVAILABLE INFORMATION
The Company has filed with the Commission under the Securities Act of 1933,
as amended (the "Securities Act"), a Registration Statement on Form F-9 relating
to the Debt Securities and of which this Prospectus is a part. This Prospectus
does not contain all of the information set forth in such Registration
Statement, to which reference is made for further information.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Commission. Under a
multijurisdictional disclosure system adopted by the United States, such reports
and other information may be prepared in accordance with the disclosure
requirements of Canada, which requirements are different from those of the
United States. Such reports and other information concerning the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at: Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
Room 1024; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of these materials can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements included and incorporated by reference herein constitute
"forward-looking statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements include, but are
not limited to, references to future capital expenditures (including the amount
and nature thereof), business strategies and measures to implement strategies,
competitive strengths, goals, expansion and growth of Brascan's business and
operations, plans and references to the future success of Brascan. These
forward-looking statements are based on certain assumptions and analyses made by
the Company in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
and developments will conform with the expectations and predictions of the
Company is subject to a number of risks and uncertainties, including, but not
limited to: general economic, market or business conditions; fluctuations in the
value of the Canadian dollar relative to other currencies; fluctuations in
interest rates; the opportunities (or lack thereof) that may be presented to,
and pursued by, Brascan; competitive actions by other companies; conditions in
the natural resources, property, energy, financial and management services
industries; the cyclical nature of the resource operations and fluctuations in
commodity prices; changes in laws or regulations, including changes in the
regulations, standards and market expectation regarding the environment,
particularly in natural resources and energy operations; risks associated with
the economic, political and regulatory policies of local governments and laws
and policies of Canada, the United States and Brazil; the potential impact of
increased competition in the markets within which Brascan operates; and other
factors, many of which are beyond the control of Brascan. Consequently, all of
the forward-looking statements made in this Prospectus and the documents
incorporated by reference herein are qualified by these cautionary statements,
and there can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if substantially realized,
that they will have the expected consequences to, or effects on, the Company. As
a result of these factors, the Company's revenue and income could vary
significantly from quarter to quarter, and past financial performance should not
be considered a reliable indicator of future performance. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements set forth or referred to above in this paragraph. Investors are
cautioned not to place undue reliance on such statements which speak only as of
the date hereof. The Company undertakes no obligation to release publicly any
revision to these forward-looking statements to reflect events or circumstances
following the date hereof or to reflect the occurrence of unanticipated events,
except as may be required by securities laws.
THE COMPANY
Brascan owns and operates real estate, power generating, financial and
natural resource businesses, located principally in North and South America.
Brascan's goal is to build long-term shareholder value by
4
creating sustainable cash flows generated from high quality assets and by
continuously developing opportunities for future growth.
The Company's main areas of business are summarized below:
- PROPERTY OPERATIONS include owning and developing commercial office
properties in selected downtown markets and master-planned residential
communities, conducted directly and through 48%-owned Brookfield
Properties Corporation.
- ENERGY OPERATIONS include generating, transmitting and distributing
electricity and related power trading activities, conducted through
wholly-owned Great Lakes Power Inc.
- FINANCIAL OPERATIONS include a select range of financial, investment
management and other businesses, conducted directly and through
71%-owned Trilon Financial Corporation.
- NATURAL RESOURCE OPERATIONS include base metal mining and metallurgical
operations, conducted through 40%-owned Noranda Inc., and building
products and specialty paper operations, conducted directly and through
41%-owned Nexfor Inc.
The Company aims to achieve leadership in each of its businesses by
ensuring that their operations are competitive, by identifying new business
opportunities and allocating and employing capital efficiently among them, and
by encouraging synergies and mutually beneficial relationships with investment
partners, customers and suppliers.
RECENT DEVELOPMENTS
The following is a summary of significant recent developments affecting
Brascan since January 1, 2001.
In January 2001, Brascan increased its ownership of Trilon Financial
Corporation from 65% to 71% as a result of Trilon Financial Corporation
repurchasing 14.5 million of its own common shares.
In February 2001, Brascan increased its ownership of Great Lakes Power Inc.
from 93% to 100%.
During the period January to November 2001, Brascan increased its ownership
of Nexfor Inc. from 33% to 41%.
In August 2001, Brascan received rating upgrades for its long-term debt to
"A (low)" from "BBB (high)" from Dominion Bond Rating Service Limited ("DBRS")
and to "A-" from "BBB" from Standard & Poor's Rating Service ("S&P").
In September 2001, Brascan issued 10,000,000 Class A Preference Shares,
Series 10, for Cdn.$250,000,000.
In October 2001, Brascan, through its wholly-owned energy subsidiary, Great
Lakes Power Inc., agreed to purchase six hydroelectric power plants and
transmission facilities in northern Maine for U.S.$156.5 million.
USE OF PROCEEDS
Unless otherwise indicated in a Prospectus Supplement relating to a series
of Debt Securities, the net proceeds received by the Company from the sale of
Debt Securities will be used by the Company for general corporate purposes,
including increasing its interests in its principal business units and the
repayment of corporate debt.
EARNINGS COVERAGE RATIOS
Coverages include information in a form (referred to generally as the
"deconsolidated basis") which differs from Brascan's consolidated financial
statements in that the net investment and net income reflect
5
Brascan's common share investments in Great Lakes Power Inc., Brascan Brazil
Ltd. and Brascan's publicly traded operating affiliates, based on the equity
method of accounting.
Brascan's interest requirements for the 12 months ended September 30, 2001
and December 31, 2000 amounted to $99 million and $106 million (consolidated
basis -- $290 million and $276 million), respectively. Brascan's earnings before
interest and income tax for the 12 months ended September 30, 2001 and December
31, 2000 were $456 million and $899 million (consolidated basis -- $666 million
and $1,103 million), respectively, which are 4.6 and 8.5 times (consolidated
basis -- 2.3 times and 4.0 times) Brascan's aggregate interest requirements for
the respective periods.
Brascan's earnings from continuing operations before interest and income
tax for the 12 months ended September 30, 2001 and December 31, 2000 were $456
million and $494 million (consolidated basis -- $666 million and $698 million),
respectively, which are 4.6 times and 4.7 times (consolidated basis -- 2.3 times
and 2.5 times) Brascan's aggregate interest requirements for the respective
periods.
Interest on Brascan's convertible notes for the 12 months ended September
30, 2001 and December 31, 2000 were $4 million and $6 million, respectively, the
inclusion of which has a negligible effect on the ratios.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities. The particular terms and provisions of the series of
Debt Securities offered by a Prospectus Supplement, and the extent to which the
general terms and provisions described below may apply thereto, will be
described in such Prospectus Supplement.
The Debt Securities will be issued under an indenture dated as of September
20, 1995, as supplemented, (the "Indenture") between the Company and Montreal
Trust Company of Canada, as trustee (the "Trustee"). The Indenture is subject to
the provisions of the Business Corporations Act (Ontario) and, consequently, is
exempt from the operation of certain provisions of the Trust Indenture Act of
1939 pursuant to Rule 4d-9 thereunder. A copy of the form of the Indenture has
been filed with the Commission as an exhibit to the Registration Statement of
which this Prospectus is a part. The following statements with respect to the
Indenture and the Securities (as hereinafter defined) are brief summaries of
certain provisions of the Indenture and do not purport to be complete; such
statements are subject to the detailed referenced provisions of the Indenture,
including the definition of capitalized terms used under this caption. Wherever
particular sections or defined terms of the Indenture are referred to, such
sections or defined terms are incorporated herein by reference as part of the
statement made, and the statement is qualified in its entirety by such
reference. The term "Securities", as used under this caption, refers to all
securities issued under the Indenture, including the Debt Securities.
GENERAL
The Indenture does not limit the aggregate principal amount of Offered
Securities (which may include debentures, notes and other unsecured evidences of
indebtedness) which may be issued thereunder, and Securities may be issued
thereunder from time to time in one or more series and may be denominated and
payable in foreign currencies or units based on or relating to foreign
currencies, including European Currency Units. Special Canadian and United
States federal income tax considerations applicable to any Securities so
denominated will be described in the Prospectus Supplement relating thereto. The
Securities offered pursuant to this Prospectus will be limited to
U.S.$500,000,000 (or the equivalent in other currencies or currency units)
aggregate principal amount. Unless otherwise indicated in the applicable
Prospectus Supplement, the Indenture also permits the Company to increase the
principal amount of any series of Securities previously issued and to issue such
increased principal amount. (Section 301) As of the date hereof,
U.S.$400,000,000 of Securities were issued under the Indenture.
The applicable Prospectus Supplement will set forth the following terms
relating to the Offered Securities: (1) the specific designation of the Offered
Securities; (2) any limit on the aggregate principal amount of the Offered
Securities; (3) the date or dates, if any, on which the Offered Securities will
mature
6
and the portion (if less than all of the principal amount) of the Offered
Securities to be payable upon declaration of acceleration of maturity; (4) the
rate or rates per annum (which may be fixed or variable) at which the Offered
Securities will bear interest, if any, the date or dates from which any such
interest will accrue and on which any such interest will be payable and the
Regular Record Dates for any interest payable on the Offered Securities which
are in registered form ("Registered Securities"); (5) any mandatory or optional
redemption or sinking fund provisions, including the period or periods within
which the price or prices at which and the terms and conditions upon which the
Offered Securities may be redeemed or purchased at the option of the Company or
otherwise; (6) whether the Offered Securities will be issuable in registered
form or bearer form or both and, if issuable in bearer form, the restrictions as
to the offer, sale and delivery of the Offered Securities in bearer form and as
to exchanges between registered and bearer form; (7) whether the Offered
Securities will be issuable in the form of one or more registered global
securities ("Registered Global Securities") and, if so, the identity of the
Depository for such Registered Global Securities; (8) the denominations in which
any of the Securities will be issuable if in other than denominations of
U.S.$1,000 and any multiple thereof; (9) each office or agency where the
principal of, and any premium and interest on, the Offered Securities will be
payable and each office or agency where the Offered Securities may be presented
for registration of transfer or exchange; (10) if other than U.S. dollars, the
foreign currency or the units based on or relating to foreign currencies in
which the Offered Securities are denominated and/or in which the payment of the
principal of, and any premium and interest on, the Offered Securities will or
may be payable; (11) any index pursuant to which the amount of payments of
principal of, and any premium and interest on, the Offered Securities will or
may be determined; (12) any other terms of the Offered Securities, including
covenants and additional Events of Default. Special Canadian and United States
federal income tax considerations applicable to Securities, the amount of
principal thereof and any premium and interest thereon which is determined by
reference to an index will be described in the Prospectus Supplement relating
thereto. Unless otherwise indicated in the applicable Prospectus Supplement, the
Indenture does not afford the Holders the right to tender Securities to the
Company for repurchase, or provide for any increase in the rate or rates of
interest per annum at which the Securities will bear interest, in the event the
Company should become involved in a highly leveraged transaction or in the event
of a change in control of the Company. (Section 301)
Securities may be issued under the Indenture bearing no interest or
interest at a rate below the prevailing market rate at the time of issuance, to
be offered and sold at a discount below their stated principal amount. The
Canadian and United States federal income tax consequences and other special
considerations applicable to any such discounted Securities or other Securities
offered and sold at par which are treated as having been issued at a discount
for Canadian and/or United States federal income tax purposes will be described
in the Prospectus Supplement relating thereto. (Section 301)
The Securities and any coupons appertaining thereto will be unsecured and
will rank pari passu with each other and with all other unsecured and
unsubordinated indebtedness for borrowed money of the Company. (Section 301)
The Company is structured as a holding company that operates through
subsidiaries. Although the Securities are senior obligations of the Company,
they are effectively subordinated to all existing and future liabilities of the
Company's consolidated subsidiaries and operating companies. The Indenture does
not restrict the ability of the Company's subsidiaries to incur additional
indebtedness. Because the Company is a holding company, the Company's ability to
service its indebtedness is dependent on dividends and other payments made on
its investments. Certain of the instruments governing the indebtedness of the
companies in which the Company has an investment may restrict the ability of
such companies to pay dividends or make other payments on investments under
certain circumstances.
FORM, DENOMINATION, EXCHANGE AND TRANSFER
Unless otherwise indicated in the applicable Prospectus Supplement, the
Securities will be issued only in fully registered form without coupons and in
denominations of U.S.$1,000 or any integral multiple thereof. (Section 302)
Securities may be presented for exchange and Registered Securities may be
presented for registration of transfer in the manner, at the places and, subject
to the restrictions set forth in the Indenture
7
and in the applicable Prospectus Supplement, without service charge, but upon
payment of any taxes or the governmental charges due in connection therewith.
The Company has appointed the Trustee as Security Registrar. (Section 305)
PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of the principal of, and any premium and interest on, Registered Securities
(other than a Registered Global Security) will be made at the office or agency
of the Trustee in Toronto, Canada, except that, at the option of the Company,
payment of any interest may be made (i) by check mailed to the address of the
Person entitled thereto at such address as shall appear in the Security Register
or (ii) by wire transfer to an account maintained by the Person entitled thereto
as specified in the Security Register. (Sections 305, 307 and 1002) Unless
otherwise indicated in the applicable Prospectus Supplement, payment of any
interest due on Registered Securities will be made to the Persons in whose name
such Registered Securities are registered at the close of business on the
Regular Record Date for such interest payment. (Section 307)
REGISTERED GLOBAL SECURITIES
The Registered Securities of a particular series may be issued in the form
of one or more Registered Global Securities which will be registered in the name
of, and deposited with, one or more Depositories or nominees, each of which will
be identified in the Prospectus Supplement relating to such series. Unless and
until exchanged, in whole or in part, for Securities in definitive registered
form, a Registered Global Security may not be transferred except as a whole by
the Depository for such Registered Global Security to a nominee of such
Depository, by a nominee of such Depository to such Depository or another
nominee of such Depository or by such Depository or any such nominee to a
successor of such Depository or a nominee of such successor. (Section 305)
The specific terms of the depository arrangement with respect to any
portion of a particular series of Securities to be represented by a Registered
Global Security will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will apply to all
depository arrangements.
Upon the issuance of a Registered Global Security, the Depository therefor
or its nominee will credit, on its book entry and registration system, the
respective principal amounts of the Securities represented by such Registered
Global Security to the accounts of such persons having accounts with such
Depository or its nominee ("participants") as shall be designated by the
underwriters, investment dealers or agents participating in the distribution of
such Securities or by the Company if such Securities are offered and sold
directly by the Company. Ownership of beneficial interests in a Registered
Global Security will be limited to participants or persons that may hold
beneficial interests through participants. Ownership of beneficial interests in
a Registered Global Security will be shown on, and the transfer of such
ownership will be effected only through, records maintained by the Depository
therefor or its nominee (with respect to beneficial interests of participants)
or by participants or persons that hold through participants (with respect to
interests of persons other than participants). The laws of some states in the
United States require certain purchasers of securities to take physical delivery
thereof in definitive form. Such depository arrangements and such laws may
impair the ability to transfer beneficial interests in a Registered Global
Security.
So long as the Depository for a Registered Global Security or its nominee
is the registered owner thereof, such Depository or such nominee, as the case
may be, will be considered the sole owner or Holder of the Securities
represented by such Registered Global Security for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a
Registered Global Security will not be entitled to have Securities of the series
represented by such Registered Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Securities of such
series in definitive form and will not be considered the owners or Holders
thereof under the Indenture.
8
Principal, premium, if any, and interest payments on a Registered Global
Security registered in the name of a Depository or its nominee will be made to
such Depository or nominee, as the case may be, as the registered owner of such
Registered Global Security. None of the Company, the Trustee or any paying agent
for Securities of the series represented by such Registered Global Security will
have any responsibility or liability for any aspect of the records relating to,
or payments made on account of, beneficial interests in such Registered Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial interests.
The Company expects that the Depository for a Registered Global Security or
its nominee, upon receipt of any payment of principal, premium or interest, will
immediately credit participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of such
Registered Global Security as shown on the records of such Depository or its
nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Registered Global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in "street name", and will be the responsibility of such participants.
If the Depository for a Registered Global Security representing Securities
of a particular series is at any time unwilling or unable to continue as
Depository and a successor Depository is not appointed by the Company within 90
days, the Company will issue Registered Securities of such series in definitive
form in exchange for such Registered Global Security. In addition, the Company
may determine, at any time and in its sole discretion, not to have the
Securities of a particular series represented by one or more Registered Global
Securities and, in such event, will issue Registered Securities of such series
in definitive form in exchange for all of the Registered Global Securities
representing Securities of such series. (Section 305)
CONSOLIDATION, MERGER, AMALGAMATION AND SALE OF ASSETS
The Company shall not enter into any transaction (whether by way of
reorganization, reconstruction, consolidation, amalgamation, merger, transfer,
sale or otherwise) whereby all or substantially all of its undertaking, property
and assets would become the property of any other Person (the "Successor
Corporation") unless: (a) the Company and the Successor Corporation shall
execute, prior to or contemporaneously with the consummation of such
transaction, such instruments and do such things as, in the opinion of counsel,
shall be necessary or advisable to establish that, upon the consummation of such
transaction, (i) the Successor Corporation will have assumed all the covenants
and obligations of the Company under the Indenture in respect of the Securities
of every series and (ii) the Securities of every series will be valid and
binding obligations of the Successor Corporation entitling the Holders thereof,
as against the Successor Corporation, to all the rights of Holders of Securities
under the Indenture; and (b) such transaction shall be on such terms and shall
be carried out at such times and otherwise in such manner as shall not be
prejudicial to the interests of the Holders of the Securities of each and every
series or to the rights and powers of the Trustee under the Indenture. (Section
801)
EVENTS OF DEFAULT
Unless otherwise indicated in any Prospectus Supplement, each of the
following will constitute an Event of Default under the Indenture with respect
to Securities of any series: (a) failure to pay principal of, or any premium on,
any Security of that series when due; (b) failure to pay any interest on any
Securities of that series when due, which failure continues for 30 days; (c)
default in the payment of principal and interest on any Security required to be
purchased pursuant to an Offer to Purchase required to be made pursuant to the
terms of the Securities of such series; (d) failure to deposit any sinking fund
payment, when due, in respect of any Security of that series; (e) failure to
perform any other covenant of the Company in the Indenture (other than a
covenant included in the Indenture solely for the benefit of a series other than
that series), which failure continues for 60 days after written notice has been
given by the Trustee or the Holders of at least 25% in aggregate principal
amount of Outstanding Securities of that series, as provided in the Indenture;
(f) failure by the Company to make any payment of principal of, or interest on,
any obligation for borrowed money (other than an obligation payable on demand or
maturing less than 12 months from the creation or issue
9
thereof) when due or within any originally stated applicable grace period having
an outstanding principal amount in excess of 5% of the Company's Consolidated
Net Worth in the aggregate at the time of default or any failure in the
performance of any other covenant of the Company contained in any instrument
under which such obligations are created or issued and if the holders thereof,
or a trustee, if any, for such holders declare such obligations to be due and
payable prior to the stated maturities thereof, provided that if such default is
waived by such holders or trustee, then the Event of Default under the Indenture
shall be deemed to be waived without further action on the part of the Trustee
or the Holders; (g) certain events of bankruptcy, insolvency or reorganization
affecting the Company; and (h) any other Events of Default provided with respect
to the Securities of such series, as described in the applicable Prospectus
Supplement. (Section 501)
If an Event of Default (other than an Event of Default described in clause
(g) above) with respect to the Securities of any series at the time outstanding
shall occur and be continuing, either the Trustee or the Holders of at least 25%
in aggregate principal amount of Outstanding Securities of that series by
notice, as provided in the Indenture, may declare the principal amount of the
Securities of that series to be due and payable immediately. If an Event of
Default described in clause (g) above with respect to the Securities of any
series at the time Outstanding shall occur, the principal amount of all the
Securities of that series will automatically, and without any action by the
Trustee or any Holder, become immediately due and payable. After any such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of the Outstanding Securities of
that series may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of accelerated
principal (or other specified amount), have been cured or waived as provided in
the Indenture. (Section 502) For information as to waiver of defaults, see "--
Modification and Waiver".
The Indenture provides that the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to the
Trustee reasonable indemnity. (Section 603) Subject to such provisions for the
indemnification of the Trustee, the Holders of a majority in aggregate principal
amount of the Outstanding Securities of any series will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee with
respect to the Securities of that series. (Section 512)
No Holder of a Security of any series will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of a receiver
or a trustee, or for any other remedy thereunder, unless (i) such Holder has
previously given to the Trustee written notice of a continuing Event of Default
with respect to the Securities of that series, (ii) the Holders of at least 25%
in aggregate principal amount of the Outstanding Securities of that series have
made a written request, and such Holder or Holders have offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee and (iii) the
Trustee has failed to institute such proceeding, and has not received from the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of that series a direction inconsistent with such request, within 60
days after such notice, request and offer. (Section 507) However, such
limitations do not apply to a suit instituted by a Holder of a Security for the
enforcement of payment of the principal of, or of any premium or interest on,
such Security on or after the applicable due date specified in such Security.
(Section 508)
The Company is required to furnish to the Trustee quarterly a statement by
certain of its officers as to whether or not the Company, to their knowledge, is
in default in the performance or observance of any of the terms, provisions and
conditions of the Indenture and, if so, specifying all such known defaults.
(Section 1004)
DEFEASANCE
The Indenture provides that, at the option of the Company, the Company will
be discharged from any and all obligations in respect of the Outstanding
Securities upon irrevocable deposit with the Trustee, in trust, of money and/or
Government Obligations which will provide money in an amount sufficient, in the
opinion of a nationally recognized firm of independent certified public
accountants, to pay the principal of or premium, if any, and each instalment of
interest, if any, on the Outstanding Securities ("Defeasance"). Such trust may
only be established if, among other things: (i) the Company has received from,
or there has been published
10
by, the Internal Revenue Service a ruling or there has been a change in law
which, in the Opinion of Counsel, provides that Holders of the Outstanding
Securities will not recognize gain or loss for United States federal income tax
purposes as a result of such Defeasance and will be subject to United States
federal income tax on the same amount, in the same manner and at the same times
as would have been the case if such Defeasance had not occurred; (ii) the
Company has delivered to the Trustee an opinion of Canadian counsel or a ruling
from Revenue Canada (now Canada Customs and Revenue Agency) to the effect that
the Holders of the Outstanding Securities will not recognize income, gain or
loss for Canadian federal, provincial or territorial income tax or other tax
purposes as a result of such Defeasance and will be subject to Canadian federal
or provincial income tax and other tax on the same amounts, in the same manner
and at the same times as would have been the case had such Defeasance not
occurred (and for the purposes of such opinion, such Canadian counsel shall
assume that Holders of the Securities include Holders who are not resident in
Canada); (iii) no Event of Default or event that, with the passing of time or
the giving of notice or both, shall constitute an Event of Default shall have
occurred or be continuing; (iv) the Company has delivered to the Trustee an
Opinion of Counsel to the effect that such deposit shall not cause the Trustee
or the trust so created to be subject to the Investment Company Act of 1940; and
(v) certain other customary conditions precedent are satisfied. The Company may
exercise its Defeasance option notwithstanding its prior exercise of its
Covenant Defeasance option described in the following paragraph if the Company
meets the conditions described in the preceding sentence at the time the Company
exercises the Defeasance option.
The Indenture provides that, at the option of the Company, unless and until
the Company has exercised its Defeasance option described in the preceding
paragraph, the Company may omit to comply with certain restrictive covenants and
such omission shall not be deemed to be an Event of Default under the Indenture
and the Outstanding Securities upon irrevocable deposit with the Trustee, in
trust, of money and/or Government Obligations which will provide money in an
amount sufficient, in the opinion of a nationally recognized firm of independent
certified public accountants, to pay the principal of and premium, if any, and
each instalment of interest, if any, on the Outstanding Securities ("Covenant
Defeasance"). In the event the Company exercises its Covenant Defeasance option,
the obligations under the Indenture (other than with respect to such covenants
and the Events of Default other than the Events of Default relating to such
covenants above) shall remain in full force and effect. Such trust may only be
established if, among other things: (i) the Company has delivered to the Trustee
an Opinion of Counsel to the effect that the Holders of the Outstanding
Securities will not recognize gain or loss for United States federal income tax
purposes as a result of such Covenant Defeasance and will be subject to United
States federal income tax on the same amount, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(ii) the Company has delivered to the Trustee an opinion of Canadian counsel or
a ruling from Revenue Canada (now Canada Customs and Revenue Agency) to the
effect that the Holders of the Outstanding Securities will not recognize income,
gain or loss for Canadian federal, provincial or territorial income tax or other
tax purposes as a result of such Covenant Defeasance and will be subject to
Canadian federal or provincial income tax and other tax on the same amounts, in
the same manner and at the same times as would have been the case had such
Covenant Defeasance not occurred (and for the purposes of such opinion, such
Canadian counsel shall assume that Holders of the Securities include Holders who
are not resident in Canada); (iii) no Event of Default or event that, with the
passing of time or the giving of notice or both, shall constitute an Event of
Default shall have occurred or be continuing; (iv) the Company has delivered to
the Trustee an Opinion of Counsel to the effect that such deposit shall not
cause the Trustee or the trust so created to be subject to the Investment
Company Act of 1940; and (v) certain other customary conditions precedent are
satisfied. (Article Thirteen)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of each series of Securities
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Security affected thereby, (a) change the Stated Maturity of the
principal of, or any instalment of interest on, any Outstanding Security, (b)
reduce the principal amount of (or the premium), or interest on, any Outstanding
Security, (c) reduce
11
the amount of the principal of any Outstanding Security payable upon the
acceleration of the maturity thereof, (d) change the place or currency of
payment of principal of (or the premium), or interest on, any Outstanding
Security, (e) impair the right to institute suit for the enforcement of any
payment on or with respect to any Outstanding Security, (f) reduce the
above-stated percentage of Outstanding Securities necessary to modify or amend
the Indenture, (g) reduce the percentage of aggregate principal amount of
Outstanding Securities necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults, (h) modify any
provisions of the Indenture relating to the modification and amendment of the
Indenture or the waiver of past defaults or covenants, except as otherwise
specified or (i) following the mailing of any Offer to Purchase, modify any
Offer to Purchase for such Outstanding Security required to be made pursuant to
the terms of such Outstanding Security in a manner materially adverse to the
Holders thereof. (Section 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series, on behalf of all Holders of Outstanding Securities of
such series, may waive compliance by the Company with certain restrictive
provisions of the Indenture. (Section 1009) Subject to certain rights of the
Trustee, as provided in the Indenture, the Holders of a majority in aggregate
principal amount of the Outstanding Securities, on behalf of all holders of
Outstanding Securities of such series, may waive any past default under the
Indenture, except a default in the payment of principal, premium or interest or
a default arising from failure to purchase any Outstanding Securities tendered
pursuant to an Offer to Purchase. (Section 513)
CONSENT TO JURISDICTION AND SERVICE
The Indenture provides that the Company irrevocably appoint CT Corporation
System, 1633 Broadway, New York, New York, 10019, as its agent for service of
process in any suit, action or proceeding arising out of or relating to the
Indenture and the Securities and for actions brought under federal or state
securities laws brought in any federal or state court located in the Borough of
Manhattan in The City of New York and submit to such jurisdiction.
ENFORCEABILITY OF JUDGMENTS
Since a substantial portion of the Company's assets are outside the United
States, any judgment obtained in the United States against the Company,
including any judgment with respect to the payment of interest and principal on
the Debt Securities, may not be collectible within the United States.
The Company has been informed by its Canadian counsel, Torys, that a court
of competent jurisdiction in the Province of Ontario would enforce a final and
conclusive judgment in personam of a court sitting in the Borough of Manhattan,
the City of New York, New York (a "New York Court") that is subsisting and
unsatisfied respecting the enforcement of the Indenture and the Securities that
is not impeachable as void or voidable under the internal laws of the State of
New York for a sum certain if: (i) the court rendering such judgment had
jurisdiction over the judgment debtor, as recognized by the courts of the
Province of Ontario (and submission by the Company in the Indenture to the
jurisdiction of the New York Court will be sufficient for the purpose); (ii)
such judgment was not obtained by fraud or in a manner contrary to natural
justice and the enforcement thereof would not be inconsistent with public
policy, as such term is understood under the laws of the Province of Ontario, or
contrary to any order made by the Attorney General of Canada under the Foreign
Extraterritorial Measures Act (Canada); (iii) the enforcement of such judgment
does not constitute, directly or indirectly, the enforcement of foreign revenue
or penal laws; and (iv) the action to enforce such judgment is commenced within
six years of the date of such judgment. The Company has been advised by such
counsel that there is some doubt as to the enforceability in Canada, against the
Company or against any of its respective directors, officers and experts who are
not residents of the United States, by a court in original actions or in actions
to enforce judgments of United States courts, of civil liabilities predicated
solely upon the United States federal securities laws.
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GOVERNING LAW
The Indenture and the Securities will be governed by the laws of the State
of New York, except with respect to the rights, powers, duties or responsibility
of the Trustee which shall be governed by the laws of the Province of Ontario
and the federal laws of Canada applicable therein. (Section 113)
THE TRUSTEE
The Trustee under the Indenture is Montreal Trust Company of Canada.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided. (Section 101)
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control", when used with
respect to any Person, means the power to influence the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" having meanings correlative to the foregoing.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Debt arrangements conveying
the right to use) real or personal property of such Person which is required to
be classified and accounted for as a capital lease or a liability on the face of
a balance sheet of such Person in accordance with generally accepted accounting
principles and which has a term of at least 36 months. The stated maturity of
such obligation shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests whether general or
limited, of such Person.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
generally accepted accounting principles, plus, without duplication, Qualifying
Subordinated Debt and Deferred Credits; provided that, with respect to the
Company, adjustments following the date of the Indenture to the accounting books
and records of the Company in accordance with U.S. Accounting Principles Board
Opinions Nos. 16 and 17 (or successor opinions thereto), or comparable standards
in Canada, or otherwise resulting from the acquisition of control of the Company
by another Person shall not be given effect.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition
of property, assets or businesses, (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business which are not overdue or which are being contested
in good faith), (v) every Capital Lease Obligation of such Person, (vi) every
obligation that could not be considered as interest in accordance with generally
accepted accounting principles under Interest Rate or Currency Protection
Agreements of such Person and (vii) every obligation of the type referred to in
clauses (i)
13
through (vi) of another Person and all dividends of another Person the payment
of which, in either case, such Person has Guaranteed or is responsible or liable
for, directly or indirectly, as obligator, Guarantor or otherwise.
"Deconsolidated" means that the net investment and net income reflect all
of the Company's common share investments in Great Lakes Power Inc., Brascan
Brazil Ltd. and the Company's publicly traded operating Affiliates based on the
equity method of accounting.
"Deferred Credits" means the deferred credits of the Company and its
Subsidiaries determined on a Deconsolidated basis in accordance with generally
accepted accounting principles.
"Government Obligation" means (x) any security which is (i) a direct
obligation of the government which issued the currency, or a direct obligation
of the Government of Canada issued in such currency, in which the Securities of
a particular series are denominated for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person the payment of which is
unconditionally guaranteed as its full faith and credit obligation by such
government which, in the case of either subclause (i) or (ii) of this clause
(x), is not callable or redeemable at the option of the issuer thereof and (y)
any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any Government Obligation which is
specified in clause (x) above and held by such bank for the account of the
holder of such depositary receipt, or with respect to any specific payment of
principal of or interest on any Government Obligation which is so specified and
held, provided that (except as required by law) such custodian is not authorized
to make any deduction from the amount payable to the holder of such depositary
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of principal or interest evidenced by such
depositary receipt.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any Debt
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including, without limitation, any obligation of such Person (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Debt, (ii) to purchase property, securities or
services for the purpose of assuring the holder of such Debt of the payment of
such Debt or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt (and "Guaranteed", "Guaranteeing"
and "Guarantor" shall have meanings correlative to the foregoing); provided,
however, that the Guarantee by any Person shall not include endorsements by such
Person for collection or deposit, in either case, in the ordinary course of
business.
"Interest Rate or Currency Protection Agreement" of any Person means any
interest rate protection agreement (including, without limitation, interest rate
swaps, caps, floors, collars and similar agreements), and/or other types of
interest hedging agreements, and any currency protection agreement (including
foreign exchange contracts, currency swap agreements or other currency hedging
arrangements).
"Qualifying Subordinated Debt" means Debt of the Company (i) which by its
terms provides that the payment of principal of (and premium, if any) and
interest on, and all other payment obligations in respect of, such Debt shall be
subordinate to the prior payment in full of the Securities to at least the
extent that no payment of principal of (or premium, if any) or interest on or
otherwise due in respect of such Debt may be made for so long as there exists
any default in the payment of principal (or premium, if any) or interest on the
Securities or any other default that, with the passing of time or the giving of
notice or both, would constitute an event of default with respect to the
Securities and (ii) which expressly by its terms gives the Company the right to
make payments of principal in respect of such Debt in Common Stock of the
Company.
"Stated Maturity", when used with respect to any Security or any instalment
of principal thereof or interest thereon, means the date specified in such
Security as the fixed date on which the principal of such Security or such
instalment of principal or interest is due and payable.
14
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters or dealers
and also may sell Debt Securities directly to purchasers or through agents.
The distribution of Debt Securities of any series may be effected from time
to time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at prices to be negotiated with purchasers.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents in the form of concessions or commissions. Underwriters,
dealers and agents that participate in the distribution of Debt Securities may
be deemed to be underwriters and any commissions received by them from the
Company and any profit on the resale of Debt Securities by them may be deemed to
be underwriting commissions under the Securities Act. Any such person that may
be deemed to be an underwriter with respect to Debt Securities of any series
will be identified in the Prospectus Supplement relating to such series.
The Prospectus Supplement relating to each series of Debt Securities will
also set forth the terms of the offering of the Debt Securities of such series,
including, to the extent applicable, the names of any underwriters or agents,
the purchase price or prices of the Offered Securities, the initial offering
price, the proceeds to the Company from the sale of the Offered Securities, the
underwriting discounts and commissions and any discounts, commissions and
concessions allowed or reallowed or paid by any underwriter to other dealers.
If so indicated in the applicable Prospectus Supplement, the Company may
authorize dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase the Offered Securities directly from
the Company pursuant to contracts providing for payment and delivery on a future
date. These contracts will be subject only to the conditions set forth in the
applicable Prospectus Supplement which will also set forth the commission
payable for solicitation of these contracts.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Debt Securities may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act and Canadian provincial
securities legislation, or to contribution with respect to payments which those
underwriters, dealers or agents may be required to make in respect thereof.
Those underwriters, dealers and agents may be customers of, engage in
transactions with or perform services for the Company or its subsidiaries in the
ordinary course of business.
Each series of Debt Securities will be a new issue of securities with no
established trading market. Unless otherwise specified in a Prospectus
Supplement relating to a series of Debt Securities, the Debt Securities will not
be listed on any securities exchange. Certain broker-dealers may make a market
in Debt Securities but will not be obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given that any
broker-dealer will make a market in the Debt Securities of any series or as to
the liquidity of the trading market for the Debt Securities of any series.
In connection with any underwritten offering of Debt Securities, the
underwriters or agents may over-allot or effect transactions which stabilize or
maintain the market price of the Debt Securities offered at a level above that
which might otherwise prevail in the open market. Such transactions, if
commenced, may be discontinued at any time.
LEGAL MATTERS
Unless otherwise specified in a Prospectus Supplement relating to a series
of Debt Securities, certain matters of Canadian and United States law relating
to the validity of the Debt Securities will be passed upon for the Company by
Torys in Toronto, Ontario, and New York, New York. The partners and associates
of Torys, as a group, beneficially own, directly or indirectly, less than one
percent of the outstanding securities of the Company.
15
EXPERTS
The consolidated financial statements of the Company for the financial year
ended December 31, 2000, incorporated by reference in this Prospectus by
reference to Brascan's 2000 annual report, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated by reference herein, and have been so incorporated in reliance on
the report of such firm given upon their authority as experts in auditing and
accounting.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been filed with the Commission as part of the
Registration Statement on Form F-9 of which this Prospectus forms a part: the
documents referred to under "Documents Incorporated by Reference"; consent of
Deloitte & Touche LLP; consent of Torys; powers of attorney; trust indenture
dated as of September 20, 1995 between the Company and Montreal Trust Company of
Canada, as trustee; and method of calculation of interest coverage.
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